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Harvard College 

Bequeathed by 

Edward Southworth Hawes 

Class of 1880 











I2mo. Half leather. ;8i.25 net each. 

WORLD POLITICS. By Paul S. Rkinsch, Ph.D., LL.B. * 

ECONOMIC CRISES. By Edward D. Jones, Ph.D. 


STATES. By Charles J. Bullock, Ph.D. 
SOCIAL CONTROL. By Edward A. Ross, Ph.D. 

By Jesse Macv, LL D. 

Baker, Ph.B. 
COLONIAL GOVERNMENT. By Paul S. Reinsch, Ph.D., LL.B. 

B. H. Meyer, Ph.D. 

T. Ely. 

Delos F. Wilcox, Ph.D. 
MONEY. By David Kinley, Ph D. 


LABOR PROBLEMS By Thomas S. Adams, Ph.D. 




Florence Kelley. 

Maltbie, Ph.D. 

Ph.D., and Ralph G. Kimble, Ph D. 


66 FiFiH Avenue. 


Studies in the Evolution 
of Industrial Society 









AU rights reserved 

^c ^^^,. G S /. IJjj. 

Copyright, 1903, 

Set up and electrotyped. Published June, 1903. Reprinted 
January, 1906. 

J. 8. Gushing <fe Co. — Berwick A; Smith Co. 
Norwood, Mass., U.S.A. 


Wi^ia Book is Betitcateti to 


Of the Supreme Court of the United States 






The following words were used in the " Editor's 
Preface" to the Citizen's Library of Economics, 
Politics, and Sociology : " It is the conviction of 
the Editor that scientific work in the field of the 
humanities may generally be made interesting to 
intelligent citizens through cultivation of clearness 
in statement and literary style. ... It is desired 
to lay emphasis on the fact that while the sciences 
of Economics, Politics, and Sociology are of con- 
cern to the citizen and make appropriate the title 
' Citizen's Library,* in no case will the interests of 
science be sacrificed to popularity. The aim will 
be to bring every volume in the Library up to the 
present standard of science, and it is hoped that 
the Library will* in more than one instance push 
forward the boundaries of knowledge." These 
words express the ideal which the author has kept 
before him in the preparation of the present vol- 
ume. This statement is made, not because the 
author ventures to hope that he has fully attained 
his ideal, but because the statement of the purpose 
which has constantly been kept in view may prove 



helpful to the reader. Many difficult topics are 
discussed in these pages, and an immense field is 
traversed. This field belongs largely to that gen- 
eral borderland where economics, ethics, biology, 
and sociology meet. At the same time, in its prep- 
aration the writer has never forgotten that he is 
writing as an economist. This borderland will 
surely prove scientifically fruitful territory, and it 
must be worked by men who approach it from the 
viewpoint of the different sciences mentioned. If 
the work is well done in each case, the scientific 
products will vary, but will constitute an harmo- 
nious whole. 

A list is appended of the author's articles and 
published addresses which have been used to a 
greater or less extent in this volume, and the 
author makes his acknowledgments with thanks 
to the publishers for permission to reprint. Not- 
withstanding the fact that the list is a rather long 
one, the book is essentially new. A large part of 
it has never appeared in print before, and even 
when previous articles have been used, they have 
generally been greatly altered and enlarged. The 
style of a speaker addressing an audience is pre- 
served in the papers on " Competition ; its Nature, 
it Permanency, and its Beneficence " and " Indus- 
trial Liberty," which the author delivered as presi- 


dent of the American Economic Association in the 
years IQCX) and 1901 respectively. Although else- 
where the author speaks in the third person, there 
seemed to him more to be gained than lost by so 

The general plan of the book is probably made 
sufficiently obvious by a perusal of the Table of 
Contents. Part I gives a general survey of the 
evolution of industrial society; Part II treats spe- 
cific problems which are problems of industrial 
evolution. These problems are all suggested in 
Part I, and they are distinctively problems which 
have been the outcome of industrial evolution. 
This thought of industrial evolution has been con- 
stantly kept in mind, and gives unity to the book. 

The author is well aware that there is scarcely 
a chapter in the book which could not be expanded 
into a volume. He hopes, however, that he has 
been able to keep a due proportion between the 
various topics discussed, and that by following this 
method he has been able to lay a foundation for 
future work. 

Acknowledgments for valuable suggestions are 
due to Professors J. Mark Baldwin, Charles J. 
Bullock, Thomas N. Carver, Frank A. Fetter, 
Franklin H. Giddings, E. A. Ross, and to Dr. G. 
R. Wicker. 



The author's acknowledgments are due to Mr. 
Solomon Huebner, Graduate Scholar in Economics, 
for permission to use the excellent tables of inheri- 
tance tax legislation in foreign countries, which he 
has prepared as part of a thorough monographic 
treatment of modem inheritance taxation. Finally, 
it is the author's duty and pleasure to express his 
appreciation for the varied assistance given him 
by his colleague, Mr. Max O. Lorenz, Assistant 
in Economics. The untiring and very efficient 
efforts of Mr. Lorenz have lightened his labors 
and added to the value of this book. 


Madison, Wisconsin, 
March, 1903. 





Competition; its Nature, its Permanency, and its Benefi- 
cence. Address delivered as President of the American Economic 
Association, in Detroit, Michigan, Dec. 27, 1900. Printed in 
Publications of the American Economic Association, 1901. 

Monopolies and Trusts. International Journal of Ethics, April, 

An Analysis of the Steel Trust. The Cosmopolitan, August, 

MuNiaPAL Ownership of Natural Monopolies. North Amer- 
ican Review, March, 1901. 

Inheritance of Property. North American Review, July, 1891. 

United States Industrial Commission's Report on Labor. 
Yale Review, November, 1902. 

How to avert Strikes. Boston Evening Transcript, Aug. 3, 
1901 ; also elsewhere. 

Industrial Liberty. Address delivered as President of the Amer- 
ican Economic Association, Washington, D.C., Dec. 27, 1901. 
Printed in Publications of the American Economic Association, 

Review of Professor J. Mark Baldwin's "Social and Eth- 
ical Interpretations." The Expositor, March, 1898. 

Our Neighbors. Chapter VII, in " Social Law of Service." New 
York, 1896. 







I. The Idea of Evolution in SoaETv . . • 3 

T^e three great ideas in human history • • • 3 

The idea of evolution — Darwin .... 4 
The biological and individual aspects of evolution at 

first developed, later social evolution ... 5 

The work of Spencer 6 

Spencer's definition of evolution • • • • 7 

The social life spheres 1 1 

II. Evolution and Industrial Society . . .12 
The nature of industrial society . • . .12 

The idea of evolution in industrial life . • • 13 

Illustrations of changing economic conditions . . 13 

Various attempts to discover order in these changes 20 

III. The Economic Stages 25 

I. Introductory 25 

Influence of the economic factor in human 

progress 25 

II. The Hunting and Fishing Stage ... 26 

Examples of the lowest existing tribes . . 27 
Characteristics of the first stage as seen in 

the life of the American Indians . 28 

(tf) Their unsettled life .... 29 
(^) Primitive soil cultivation — the women 

do the work 30 

(^) Little opportunity for development of 

slavery 33 




III. (^ConL) (d) Their reliance on magic and ceremony 33 
(e) Their lack of forethought ... 34 
(/) They lacked the conception of owner- 
ship 36 

(^) The beginnings of trade ... 37 

Fishing tribes . ' 38 

The need of steady labor and cooperation . 38 

III. The Pastoral Stage 39 

The beginnings of domestication • • • 39 

Examples of pastoral peoples • • • 39 

The influence of environment ... 41 

Elements of progress in the pastoral stage . 43 

IV. The Agricultural Stage 43 

Examples of the change from pastoral to 

agricultural life .... 43 

The growth of population .... 46 

The development of slavery ... 47 

Development of private landownership . 48 

Self-sufficiency of the groups in this period . 50 

The transition to the handicraft stage . . 51 

V. The Handicraft Stage 52 

English and American conditions in this 

stage compared .... 52 

Character of early manufacturing . . 54 

Money replaces barter • • • • 55 

Competition not relied on to fix prices . 55 

Transition to the industrial stage . . 57 

VI. The Industrial Stage 57 

The industrial revolution . . . -57 

Character of the change in America . . 58 
The reaction against a /atssez-fairg policy; 

difficulties of readjustment . . 60 
Universal competition — first phase of the 

industrial era 62 

Concentration the second phase . .^ . 63 

Integration the third phase .... 64 

The efficiency of machine methods . . 65 

The economic stages from other points of view 66 



IV. Economic Classes 74 

Economic classes defined 74 

The rise of the industrial classes .... 75 

Classes in America 75 

Varieties of class divisions 78 

Equality of opportunity 81 

Monopoly and class divisions 82 

Conclusion 84 

V. Recent Tendencies of Industrial Evolution . 87 

Modifications in the institution of property • . 87 

The evolution of forethought 89 

Cooperation the great law of social life growth . 89 

Conscious social cooperation 90 

Harmony and unity in industry . . . .91 
The outcome of the trust movement according to 

Marx . . . . ' . . . -95 

Large-scale production and monopoly distinguished 96 

Competition a pillar of the social order ... 97 

The industrial problem in general terms ... 97 

Mutual dependence is not slavery .... 98 

VL Statistical Results 100 

Increasing growth and density of population . . 100 
Increase in wealth and well-being . . . .101 

Occupations of the people 104 

Groups of industries and values of products . . 105 

Use of steam, water, and other power . . . 106 

Industrial combinations . . • • • . 107 

Exports and imports 108 

Growth of commerce 1 10 

Railways Ill 

Wages 112 

Strikes 114 

Child labor 115 

Decline in the death-rate 116 

Appendix to Part I. Literature 117 






I. Competition; its Nature, its Permanency, and 

ITS Beneficence 123 

Literature 149 

XL Rivalry and Success in Economic Life . .152 

III. Social Progress and Race Improvement • .164 

Literature 1 81 

Appendix A. Institutions for the Feeble-minded 

in the United States 185 

Appendix B. The Connecticut Law regulating 

Marriage 187 

IV. Monopolies and Trusts 189 

I. General Statement of the Problem • .189 
II. Analysis of the Steel Trust . . • • 206 

III. Remedies 214 

Literature 223 

V. Municipal Ownership of Natural Monopolies; 
WITH A Note on the Establishment of a 
Parcels Post and the National Ownership 
OF the Telephone, Telegraph, and Railway 225 
I. Municipal Ownership of Natural Monopolies . 225 
II, Note on the Establishment of a Parcels Post 
and the National Ownership of the Tele- 
phone, Telegraph, and Railways . . 242 
Literature 253 

VI. Concentration and Diffusion of Wealth . .255 

Literature • 269 




VII. The Inheritance of Property . . . .271 

Literature 304 

Appendix A. Wisconsin Bill for the Taxation of 

Inheritances .... 305 
Appendix B. Rates, Exemptions, and Classifica- 
tions in Wisconsin Bill . . 309 
Appendix C. Inheritance Taxes in the United 

States 310 

Appendix D. Inheritance Taxes in Foreign Coun- 
tries .... following 311 
Appendix E. Progressive Inheritance Taxes in 

Foreign Countries • . .312 

VIII. The Evolution of Public Expenditures . .315 
Literature 329 

IX. United States Industrial Commission's Report 

ON Labor 331 

Literature * 365 

Appendix A. The Policy of Trade-unions with 

Respect to Non-union Men . . 365 

Appendix B. Duties of Factory Inspectors in the 

United States .... 367 

Appendix C. Child Labor and Compulsory Edu- 
cation Laws .... 370 

Appendix D. Employers' Liability in England . 371 

X. Industrial Peace 374 

Literature 390 

Appendix. Chicago Interocean Agreement (Type 

of Trade Agreement) 392 

XI. Industrial Liberty 398 

Literature 424 

XII. Widening and Deepening Range of Ethical 

Obligation 426 

I. The Process Outlined 426 




II. A More Detailed Examination of Causes and 

Methods 434 

Literature 448 

XIII. Social and Ethical Interpretations . . • 450 

Literature 460 

XIV. The Possibilities of Social Reform . . .461 

I. Socialism and Social Reform Contrasted . 461 
II. Forces operating in the Direction of Concen- 
tration of Wealth ..... 474 

III. Forces which operate to diffuse Wealth . 478 

IV. The Participation of the Best Elements in 

Society a Condition of a Sound Public Life 485 

Literature 487 

Index 49^ 






The history of ideas is the history of man. 
Ideas distinguish man from all lower animals, and 
all that is significant in human history may be 
traced back to ideas. From time to time, in the 
history of mankind, an idea of such tremendous im- 
port has found acceptance in the minds and hearts 
of men that it has been followed by a new era in 
the progress of the human race. The idea of Je- 
hovah, which found acceptance among the ancient 
Hebrews, was one of these germinal ideas, which 
made the world ever thereafter a different world. 
That idea has been moulding human history ever 
since it was first clearly received and promulgated. 
The idea of itself, from the time of its reception 
up to the present, has been growing larger, and 
more elevated and refined. It has undergone a 
perpetual process of purification, and has been one 
of the great psychical forces which give shape to 
human history. Christianity came into the world 



as the outcome of another grand idea, and since 
its reception the world has been a new world. Its 
mighty significance has been recognized in dating 
all events with reference to the founder of that 
religion. Everything which happens is either be- 
fore Christ or after Christ. Altogether apart from 
any peculiar belief in the mission and person of 
Christ, this could not be otherwise. Passing on 
down the stream of human history, we come to 
still another idea which has made the world differ- 
ent from what it was before, and is thus giving 
direction to human history. This is the idea of 
evolution, the general acceptance of which we 
must recognize as the distinguishing characteristic 
of nineteenth century thought. 

This idea of evolution is one of long growth.^ 
Some foreshadowings may be found in the early 
philosophy of the Greeks, and the idea recurs 
from time to time in the history of philosophical 
speculation. By the time of Charles Darwin, 
many naturalists had become convinced in a gen- 
eral way that there was a development from the 
lower to the higher forms of life, but they had 
not been able to tell how it had taken place. The 
peculiar service of Darwin was the explanation of 
the method of biological development by nieans of 
the theory of natural selection. It was in 1859 
that he published his great work entitled, "The 
Origin of Species by Means of Natural Selection," 

^ For a history of the idea, see Osborn, ** From the Greeks to 
Darwin," 2d ed., New York, 1899. 



and so convincing was the evidence he submitted 
that the general acceptance of the idea of evolution 
dates from the publication of this book. It is in- 
teresting to note that both Darwin and Wallace, 
who discovered the theory of natural selection 
independently, received special assistance from 
Malthus' work on population. 

Darwin's researches were restricted almost alto- 
gether to the evolution of the individual organism. 
Even now, when evolution is mentioned, we think 
of the evolution of the individual. It is from this 
standpoint that Huxley — Darwin's bulldog, as 
he was called — defines the term : " Evolution or 
development is, in fact, at present employed in 
biology as a general name for the history of the 
steps by which any living being has acquired the 
morphological and physiological characters which 
distinguish it.*'^ A recent writer gives the follow- 
ing definition : " By evolution we mean to-day not 
only that all living forms have descended from 
those living in the past, but also that new forms 
have arisen from the old ones."^ This writer says 
further that from the ranks of biologists few now 
arise to question the correctness of the theory of 
evolution, although many no longer regard Dar- 
win's theory of natural selection as a sufficient 

1 "Evolution in Biology," 1878, Collected Essays, New York, 
1896, Vol. II, p. 196. 

a ** Darwinism in the Light of Modern Criticism," by Thomas 
Hunt Morgan, Ph.D., Professor of Biology, Bryn Mawr College, 
Harper's Monthly Magazine^ February, 1903, p. 476. 



explanation of the method of development. The 
biologists, however, while confining themselves 
for the most part to the physiological and indi- 
vidual aspects of evolution, knew well enough 
that it had a wider meaning for man. To ex- 
pound this wider and deeper meaning was the 
work of Herbert Spencer. 

Four years before Darwin published his " Origin 
of Species," Spencer published his " Principles of 
Psychology,'* in which he enunciates the principle 
of mental evolution. Two years later (1857) he 
made a much wider application of the idea in an 
essay entitled, "Progress: Its Law and Cause.*' ^ 
The same process, he says in this essay, we may 
see " alike in the earliest changes of the Universe 
to which we can reason our way back ; and in the 
earliest changes which we can inductively estab- 
lish ; it is seen in the geologic and climatic evolu- 
tion of the Earth, and of every single organism on 
its surface ; it is seen in the evolution of Human- 
ity, whether contemplated in the civilized individ- 
ual, or in the aggregation of races ; it is seen in 
the evolution of Society in respect alike of its 
political, its religious, and its economical organi- 
zation ; and it is seen in the evolution of all those 
endless concrete and abstract products of human 
activity which constitute the environment of our 
daily life.** It is probably due to Herbert Spencer 

^ Westminster Review, April, 1857; p. 255. Reprinted in " Il- 
lustrations of Universal Progress; a Series of Discussions," by 
Herbert Spencer, New York, 1874. 



more than to any other one person that we have 
come to recognize the applicability of evolution to 
the various departments of the social life of man. 
We have an evolution of the body, and also an 
evolution of the mind, and we have an evolution of 
society, which is the highest form of life.^ 

Evolution in its broadest terms is defined by 
Spencer as follows, " Evolution is an integration 
of matter and concomitant dissipation of motion ; 
during which the matter passes from an indefinite, 
incoherent homogeneity to a definite, coherent hete- 
rogeneity ; and during which the retained motion 
undergoes a parallel transformation.*' ^ xhis defini- 
tion, although not exhaustive, is especially helpful 
as an approach to the study of the evolution of 

Early society is little more than a mere mass of 
men, composed of individuals with like occupa- 
tions, like habits, like beliefs. In a few individuals 
we see all. Even in physical characteristics, it is 
altogether probable that differences among highly 
civilized men are far more numerous. This is 
especially noticeable in the matter of color of hair 

1 For an interesting discussion of the relations of the individual 
man to society, see a paper by the late Professor Joseph Le Conte, 
entitled, "The Effects of the Theory of Evolution on Education," 
published in the Proceedings and Addresses of the National Edu- 
cational Association, held in Denver, 1895, p. 149. 

* " First Principles of a New System of Philosophy," 2d ed., New 
York, 1868, p. 396. See also an article by Spencer, entitled " What 
is Social Progress?" Nineteenth Century Magazine^ Vol. XLIV, 
p. 348. 



and eyes. Careful measurements of a large num- 
ber of white and negro children have shown that 
there is a greater diversity among white children 
in all their normal physical characters.^ Of 
course, even the rudest society that we know is 
not entirely homogeneous : there is a diiBferentiation 
on account of sex, age, and natural ability; the 
medicine men are diiBferent from the rest of the 
tribe, and the various individuals are recognized 
as belonging to different marriage groups; and 
yet, on the whole, one man lives about the same 
life as does every other man.^ In a hunting tribe, 
all of the men are hunters and warriors. But 
in a highly developed society, we find a vast and 
growing number of groups, and within the groups 
individuality becomes more marked. A military 
life, a public life, a professional life, or a business or 
industrial life, with its thousands of occupations, — 
each puts its peculiar stamp on men, mentally and 

This, however, is but a part of Spencer's defini- 
tion. Along with this differentiation there is also 

1 Dr. A. Hrdlicka, in the American Anthropologist^ Vol. XI, 

p. 347. 

* " The New Zealander ... is acquainted with every department 
of knowledge common to his race : he can build his house, can make 
his canoe, his nets, his hooks and lines; he can manufacture snares 
to suit every bird, and form his traps; he can fabricate his gar- 
ments, and every tool and implement required. It is not a single 
individual, or a few only, who are adepts in these various arts, but 
all."— Taylor, "TE IKA A MAUI, or New Zealand and its In- 
habitants," London, 2d ed., 1870, p. 3. 



an integration, a binding together of the various 
groups. Early society is incoherent. When we 
read of a tribe ^ that has no home, nor hut, nor any 
fixed habitation, living only beneath the trees, and 
moving from place to place, according to the sea- 
sons and the search for wild fruits and roots, it is 
evident that the destruction of any part of the group 
would make no vital change in the life of the re- 
mainder. Not so in a developed society. Spe- 
cialization has brought with it interdependence. 
Let the class that devotes itself to transporta- 
tion, for example, cease working, and the disastrous 
and far-reaching consequences to the rest of the 
community can scarcely be imagined. Civilized 
society is coherent. 

This view of the matter undoubtedly tells us 
something that is true about the development of 
society. We are convinced that there has been a 
social evolution, and that this has meant a growing 
complexity and coherence, and yet that does not 
reveal to us the causes that are at work. Neither 
Mr. Spencer nor any one else has been able to 
explain the actual process of social evolution in a 
way that has been generally accepted. Attempts 
have been made to carry over the principle of 
natural selection from biology into the study of the 
social life of man. Bagehot's " Physics and Politics, " 

1 " The Aborigines of the Province of Santa Marta, G)lumbia," 
American Anthropologist (New Series), Vol. Ill, p. 631, in an 
article bearing the above title, by Francis C. Nicholas, who gives a 
translation of part of a work written by a Spanish priest in 1739. 



and Kidd's "Social Evolution" may be cited as 
illustrations. But before the method of social 
evolution is worked out satisfactorily, probably a 
good deal of further investigation will have to be 
carried on in the separate departments of social 

Usually, when we speak of social evolution, we 
have in mind social progress, but it may also imply 
social degeneration. Just as an individual may 
degenerate into an idiot or a criminal, a whole 
people may sink into decay. The history of the 
ancient world is full of illustrations. But in many 
cases such a retrogression seems to be a part of a 
world progress. Greece and Rome decayed after 
their civilizations had borne fruit. Similarly, within 
each society, there is an atrophy of institutions no 
longer needed by the developing organism. A 
modern city has meant the decay of town meetings ; 
the movement toward large scale production has 
meant the crushing out of many formerly flourish- 
ing enterprises.^ But may not mankind as a whole 
degenerate.? May not the human species finally 
arrive at old age and death ? We who have faith in 
human nature will agree with Schaffle^ that, 
although the physical conditions of the earth may 
so change as to make a high civilization impossible, 

^ See, on this point, " Evolution by Atrophy in Biology and 
Sociology," by Demoor and others, New York, 1899. (Translated 
from the French by Mrs. Chalmers Mitchell.) 

2 jBau und Leben des socialen K'orpers^ Tfibingen, 1878, Vol. II, 
p. 445- 



yet while physical conditions remain as they now 
are, a general human retrogression is not conceiv- 

The life of man in society is a unit, but, on 
account of the limitations of the mind, it is 
necessary for purposes of study to divide it into 
parts, and to examine them separately. Thus, we 
have the social life spheres of literature, religion, 
politics, industry, etc. The work of those sciences 
which may be broadly classed as the humanities 
has in recent years largely consisted in tracing out 
the evolution in the separate departments of social 
life. Even ethics and religion are now conceived 
of as undergoing evolution both in theory and 
practice.^ It is with the industrial life sphere 
that we are especially concerned. 

1 See article on " Evolution of Religion," in the " Dictionary of 
Philosophy and Psychology," edited by James Mark Baldwin, New 
York, 1902, where many references are given. 




The social organism, we have said, is a unit, 
but we may study it from various points of view 
in the same way that we may study the human 
body with special reference to the nervous system 
or the digestive system. The term "industrial 
society " is merely a short way of saying, " society 
viewed from the industrial standpoint/* How 
much is included from this point of view ? The 
tools and processes of production and the organ- 
ization of industry at once occur to us. But in 
addition to these we must take into consideration 
the ways in which industry binds men together, 
forms them into classes, and how it affects their 
health and well-being. Then there are certain 
mental and moral characteristics that are of im- 
portance from this point of view, such as foresight, 
industry, honesty, and capacity for social coopera- 
tion ; and finally, certain legal institutions, such as 
private property, inheritance, contract, and per- 
sonal freedom, are the very corner-stones of our 
present economic life. The study of the industrial 
life sphere, therefore, is more than a study of 
machines and factories. 


Most people who think at all are well aware that 
changes have recently been going on in the eco- 
nomic world about them. The " trust *' movement 
is so recent and so striking that it is observed by all. 
Yet this by no means implies a prevalence of the 
evolutionary point of view in the consideration of 
our industrial life. Very many look upon these 
changes as something to be deplored, as an abnor- 
mal condition, to be contrasted with a former long- 
continued period of independence and opportunity. 
The evolutionary point of view, on the contrary, 
emphasizes the fact that these present changes 
are merely a link in a great chain of continuous 
development that extends back to the beginning 
of human existence and that must continue in the 
future. The evolution of industrial society signi- 
fies a continuous change, a perpetual flux of 
economic relations and institutions. It is true, 
these changes do not always proceed with the 
same rapidity. They appear to be especially 
rapid just now, as they have been throughout 
the whole of the nineteenth century. It is, in 
fact, only within the last one hundred years that 
the industrial ties binding men together have, be- 
come so extensive and intensive that the term 
"industrial society" has become familiar. 

The improvements in the mechanical instru- 
ments of production are perhaps the most evident 
of the changes that constitute economic evolution. 
We need merely contrast the slow work of the 
mediaeval copyists with the work of a modem 



press that is capable of printing and delivering, 
folded, twelve thousand twenty-four page papers 
per hour; or think first of the Iroquois woman, 
tilling the soil with the shoulder blade of a deer, 
and then think of a modern steam plough ; or 
compare the simple loom of the Pueblo woman 
with the complex machinery of a modern cotton 
factory; or again, compare the human carriers 
employed by the ancient Mexican merchants, 
transporting ^ fifty pounds each five or six leagues 
a day, with the long line of cars in a modem 
freight train. How recent in the world's history 
these improvements in technical processes really 
are, is strikingly illustrated by the following dia- 

gram : 2 — 

2000 B.C. 

Birth of Christ 

1500 A.D. 

Time during which the hand spindle was the only form 
of spindle l<nown. 

Spinning wheeJ atso known. 

Steam has been applied to spinning. '^^ 

We ordinarily think of the spinning-wheel as 
something very old and primitive, yet the period 

i"The Despatches of Hernando G)rtes," translated from the 
Spanish by George Folsom, New York and London, 1843, P» ^'3; 
also Prescott, " History of the Conquest of Mexico," New York, 
1854, Vol. I, p. 348. 

* From the First Report of the Labor Museum at Hull House, 
Chicago, 1 901-1902, p. 9. 



during which it has been used is but a small frac- 
tion of the time in which man depended on the 
hand spindle. We are told^ that many of the 
Italian women who come to Chicago have never 
seen spinning-wheels, and look upon them as a 
new and wonderful invention. The period during 
which steam has been applied to cotton manu- 
facture is even still shorter (since 1785). 

An increasing division of labor and of occupa- 
tions has accompanied these technical improve- 
ments. Long ago Adam Smith pointed out that 
what is the work of one man in a rude state of 
society is generally the work of several in an im- 
proved one.^ The degree to which this process 
is being carried is strikingly illustrated by the 
growth in the actual number of occupations which 
people pursue for a living. A Boston directory 
for 1789 gives less than two hundred occupations; 
at the present time there are probably as many as 
ten thousand.^ This will not seem at all incred- 
ible when we consider the extent of the present 

^ From the First Report of the Labor Museum at Hull House, 
Chicago, 1 901 -1 902, p. 9. 

* It happens, however, that in the particular illustration that he 
chose, the number of occupations has recently been growing less. 
In the making of pins there were seventeen operations by the 
hand method, and now by the machine method there are only ten. 
(Thirteenth Annual Report of the United States Commissioner 
of Labor, 1898, Vol. I, p. 63.) 

* Judging from the German census of occupations (see Bucher*s 
"Industrial Evolution," translated by S. M./Wickett, New York, 
1901 , p. 324) . Our own census of 1 900 gives only 303 groups of occu- 
pations, which is less than the number given in the census of 1870. 



subdivision of one particular occupation of the 
earlier period. Instead of one or two men per- 
forming all the operations in the making of a boot, 
we have to-day a front cutter, back cutter, back 
stay cutter, top cutter, facing cutter, lining cutter, 
sorter and buncher, size and case marker, stay 
skiver, top skiver, crimper, front trimmer, top 
front stitcher, top back stitcher, and so on to as 
many as one hundred and thirteen.^ The making 
of a hand rake is divided among sawyers, turners, 
tenoners, truckmen, straighteners, binders, borers, 
Sanders, planers, moulders, trimmers, finishers, etc.^ 

Illustrations of the division of occupations can 
be given from their own experience by many per- 
sons now living. The writer recalls a man who 
was at the same time doctor, preacher, and farmer, 
and another who was a farmer, shoemaker, and 
carpenter. De Tocqueville, who visited the United 
States in 183 1, says that almost all the farmers 
combined some trade with agriculture.^ School- 
teacher and surgeon is a combination found in 
early Boston, and in England it was at one time 
customary for barbers to be also surgeons.* 

Not only has there been a constant tendency to 

^ Thirteenth Annual Report of the United States Commissioner 
of Labor, 1898, Vol. II, p. 529. 2 /^j,-^., p. 483. 

* " Democracy in America,** translated by Henry Reeve, 5th 
ed., Boston, 1873, Vol. II, p. 191. 

* A survival is found in the colors of the barber's pole, the red 
indicating blood-letting. In Baltimore, doubtless as elsewhere in 
the United States, to this day one can find a barber advertising 
" cupping and bleeding." 



divide the work of one man among several, but 
entirely new occupations have been springing up. 
Here are a few of those that do not appear in the 
Boston directory for 1789: stenographer, iceman, 
life insurance agent, photographer, letter-carrier, 
advertisement writer, expert accountant, bicycle 
repairer, funeral director, commercial traveller, 
elevator tender, window-dresser, lithographer, ster- 
eotyper, and in addition there are a host of occu- 
pations that are suggested by the mere mention 
of the words steam and electricity. 

Such changes as the foregoing imply also a 
changing economic organization. The great en- 
terprises in every line of business are carried on 
largely by corporations, and this seems to us very 
natural; yet in 1776 Adam Smith could write: 
"The only trades which it seems possible for a 
joint stock company to carry on successfully, with- 
out an exclusive privilege, are those of which all 
the operations are capable of being reduced to 
what is called a routine, or to such a uniformity 
of method which admits of little or no variation. 
Of this kind is, first, the banking trade ; secondly, 
the trade of insurance from fire, and from sea 
risk and capture in time of war ; thirdly, the trade 
of making and maintaining a navigable cut or 
canal ; and fourthly, the similar trade of bringing 
water for the supply of a great city." ^ The typi- 
cal manufacturing establishment a hundred years 
ago was a little shop where a master mechanic 

1 *• Wealth of Nations," Bk. V, Ch. I, Pt III, Art. I. 

c 17 


worked with hand tools, aided perhaps by two or 
three journeymen and apprentices. Now it is a 
large plant, using natural forces as motive power. 
It is owned by a vast industrial corporation, and 
over against the capital which owns and directs 
the establishment, we have hundreds and even 
thousands of men working with tools which they 
do not own. Those connected with a modem rail- 
way form a vast hierarchy of stockholders, officers, 
clerks, station agents, enginemen, firemen, con- 
ductors, brakemen, machinists, carpenters, shop- 
men, switchmen, flagmen, watchmen, telegraphers, 
all closely organized. The ties binding them to 
the rest of the community are so close that the 
cessation of their operations must mean the keen- 
est distress, even death, to thousands and hun- 
dreds of thousands. Such a development has 
brought with it widely separated classes, the com- 
mon laborer marking one extreme, the railway 
magnate the other, the one living in a shanty, the 
other in a palace, and both probably never knowing 
each other. At Chicago Commons (a social settle- 
ment at Grand Avenue and Morgan Streets, 
Chicago) recently " an employer and an employee 
who had sustained that relationship for seventeen 
years met for the first time.*' ^ 

The banks which we now see in any American 
city mean that the industrial world in which we 

i"The Labor Contract" (Ms., p. 74), August, 1902, a thesis 
submitted to the University of Wisconsin for the degree of Doctor 
of Philosophy, by Dr. Margaret A. Schaffner. 



live is a different one from that familiar to the 
fathers of this republic. A little more than a hun- 
dred years ago there were but three banks in the 
United States. Now there are more than two 
thousand times that number. Had all the banks 
of 1790 failed, it is safe to say that three-fourths 
of all the people of the United States .would not 
have known the difference. Should all these 
banks fail to-day, there is scarcely a man or woman 
in the United States who would not feel the disas- 
trous effects, and words could not describe the suf- 
fering which would ensue, not only to the people of 
the United States, but to the entire world. The 
banking institutions of to-day mean a new economic 
world, a world bound together by the closest ties. 

New words in our vocabulary and the changed 
meanings of old ones afford further illustrations. 
The word "manufacturing" is used by Adam 
Smith to mean working with one's hands, and he 
says that a man may become rich by employing 
a multitude of manufacturers. We call a maiden 
a spinster because it was taken for granted that 
the unmarried daughters of a family should largely 
occupy themselves with the spinning-wheel. A 
furlong meant originally a " furrow long," and re- 
minds us of the early English manor where the 
common fields were ploughed in acre pieces (or 
less), the furrow on one side being forty rods in 
length.^ The word " farmer " refers to the mediae- 
val English tenant who held a piece of land for 

1 Cheney, " Industrial and Social History of England," p. 34. 


which he paid the lord " a * farm * or firma^ that 
is, a settled established sum, in place of the vari- 
ous forms of profit that might have been secured 
from it by the lord of the manor." ^ Our common 
word " staple " meant an established market, and 
in early England certain towns were designated as 
ones to which all goods had to be brought before 
being exported. These were " staple towns," and 
the principal commodities exported (wool, skins, 
and leather) became known as staple commodities. 
The fact that the German traders who came to 
England in the Middle Ages were called Easter- 
lings accounts for the use of the word " sterling " 
in connection with English money. Such expres- 
sions as socialist, scab, government by injunction, 
walking delegate, collective bargaining, sliding 
scale, watered stock, wheat pit, workingmen's 
insurance, factory legislation, bonanza farming, 
captain of industry, full dinner pail, cooperation 
and profit-sharing, municipal ownership, mail order 
business, etc., are mostly terms which George Wash- 
ington would not have understood at all. 

Such considerations as the foregoing impress us 
with the fact that the economic world is a chang- 
ing world. But are the changes which we have 
been considering, ordered changes? Does law 
underlie them } The universality of the reign of 
law is a fundamental hypothesis of modern science, 
and unless we think things happen by chance, we 
must affirm that there is order in the changes in 

1 Cheney, "Industrial and Social History of England," p. 129. 


the industrial world, as there is order in the natural 

The idea of the evolution of society in general 
has been one of slow, general acceptance, and 
perhaps still more slowly has been received the 
idea of the evolution of industrial society, with all 
the implications which necessarily follow from this 
idea. Nevertheless, the idea of the evolution of 
industrial society was clearly advanced more than 
fifty years ago, several years prior to the publication 
of Herbert Spencer's " Psychology,'* by the group 
of German economists who are now ordinarily 
designated as the German Historical School. Of 
these, the three most prominent were Bruno Hilde- 
brand, Wilhelm Roscher, and Karl Knies, — the 
last-named of whom was the honored and revered 
professor under whom it was the author's privilege 
to study as a student in Heidelberg. Even before 
their time Friedrich List, a German economist, who 
had lived for several years in the United States 
and was deeply impressed with our growth, had ad- 
vanced the idea of an industrial evolution. In his 
" National System of Political Economy," he says, 
" In the economical development of nations, it is 
necessary to distinguish the following principal 
stages : the savage state, the pastoral state, the 
agricultural state, the agricultural and manufactur- 
ing state, and finally, the agricultural, manufactur- 
ing, and commercial state." ^ He was interested 

1 Translation from the German by G. A. Matile, Philadelphia, 
1856, p. 72. 



especially in the problem of the protective tarifit 
holding that the policy which was suitable for one 
period in a nation's growth could not be safely 
followed in a subsequent period. In other words, 
he taught clearly that no one could properly de- 
scribe himself in absolute terms either as a free- 
trader or a protectionist, but that a man might be 
rationally a free-trader at one period of develop- 
ment, a protectionist at a later period, and again, 
at a subsequent period, like that now attained by 
the United States, a free-trader. So, a man could 
be a free-trader in one country, as England, and 
a protectionist in another country, as Germany 
or the United States in his day. This is simply 
adduced as an illustration. The historical econo- 
mists must have received valuable suggestions from 
List, but they were most of all influenced by the 
comparative and historical school of jurisprudence, 
so ably led by that great jurist, Savigny. The 
relativity of human institutions was the central 
thought, and the only one which need concern us 
at the present time. They protested against what 
was called absolutism and perpetualism, absolutism 
meaning that one policy could be a good policy 
for all countries, and perpetualism, that one policy 
could be good for all periods of time. 

In 1848 Karl Marx and his friend, Friedrich 
Engels, presented to the world a theory of evolu- 
tion which is called by its adherents scientific 
socialism. The basis of that theory is the propo- 
sition that in every historical epoch the social, 



political, and intellectual life is determined by 
prevailing economic conditions, and that in the 
future, the economic conditions will be such as to 
necessitate inevitably a socialistic organization of 
society. To this we shall recur in a later chapter. 
The followers of Marx rank him with Darwin and 
Spencer as an evolutionary thinker.^ 

In 1896 Herbert Spencer published the third 
volume of his " Principles of Sociology,'* in which 
he traces the development of industrial institutions 
in particular. It did not receive very much atten- 
tion because the main ideas which it contains, such 
as the growth of specialization and integration, the 
distinction between the militant and industrial 
types of society, and the author's uncompromis- 
ing hostility to socialism, had been made familiar 
by his earlier writings. 

Investigation has, perhaps, not proceeded far 
enough to enable us to state with great positiveness 
what the laws of change are. We have, indeed, 
in this investigation one of the richest fields for the 
cultivation of science. These changes are in part 
psychical in their causes, and we do not yet know 
enough about the laws of the individual mind or of 
the social mind to enable us to know what we should 
like about the order of industrial evolution. 

1 In recent years a high position among the world's thinkers has 
been attributed to Marx even by non-socialists. Professor E. R. A. 
Seligman of Columbia University may be mentioned in this con- 
nection, and the reader is referred to his work, " The Economic 
Interpretation of History." 



Nevertheless, the various classifications of the 
stages of industrial evolution that have been 
proposed are not without value. The one sug- 
gested by List has been usually followed in the 
past, so far as its main outline is concerned, 
and it seems to the writer that, in spite of all 
criticism, it is still, with some modifications, the 
most serviceable as a framework within which to 
study the course of economic development, and 
accordingly we shall follow it as a basis for our 
classification in the next chapter. As will be 
shown, however, it is not contradictory to the 
other classifications that have been proposed. 




I. Introductory 

The way in which people get their living is in 
very intimate relation with their whole social life. 
It is probable, says Morgan, " that the great epochs 
of human progress have been identified, more or less 
directly, with the enlargement of the sources of sub- 
sistence.'*^ When men rely on hunting and fishing 
for a living, they are very different men from what 
they are when they have settled down to a predom- 
inantly agricultural life, or when they satisfy their 
wants by the aid of vast aggregations of capital.^ 

1 Morgan, "Ancient Society," New York, 1878, p. 19. 

2 Karl Marx and his followers exaggerate greatly the influence 
of the economic life of a people upon their social life in general, 
holding what is known as the materialistic conception of history, 
or, as Professor Edwin R. A. Seligman calls it, the economic inter- 
pretation of history. This doctrine is defined by Professor Seligman 
as follows : " We understand, then, by the theory of the economic 
interpretation of history, not that all history is to be explained in 
economic terms alone, but that the chief considerations in human 
progress are the social considerations, and that the important factor 
in the social change is the economic factor. The economic inter- 
pretation of history means, not that the economic relations exert an 
exclusive influence, but that they exert a preponderant influence in 
shaping the progress of society." — The Economic Interpretation 



The ways of getting a living, therefore, ought to 
be a serviceable point of view from which to study 
the development of man, and from this point of 
view we get the following stages : — 

1. The hunting and fishing stage. 

2. The pastoral stage. 

3. The agricultural stage. 

4. The handicraft stage. 
5- The industrial stage. 

1st phase: Universal competition as an 

2d phase: Concentration. 
3d phase: Integration. 

II. The Hunting and Fishing Stage 

If we accept the doctrine of evolution, we must 
be able to look back upon a time when our ances- 
tors were living a mere animal existence. This 
indeed requires no great stretch of the imagina- 

of History," Political Science Quarterly, March, 1902, VoL XVII, 
p. 76. 

When stated in this mild form, it is difficult to see why the doc- 
trine should have aroused so much discussion. The controversy 
seems simply to be whether we shall say the economic factor is the 
most or a most important factor. But to the Marxists generally 
the materialistic conception of history signifies far more than this. 
For example, one of them recently stated that religion is not a 
cause, but a product, that is, of economic life. See " The Economic 
Interpretation of History," by Mrs. May Wood Simons, in the /«- 
ternational Socialist Review, March, 1903. This subject receives 
further treatment from a somewhat different viewpoint in the chap- 
ter on the "Widening and Deepening Range of Ethical Obliga- 
tion," Pt. II, Ch. XII. 



tion when one has read descriptions of some of 
the most primitive tribes upon the earth to-day,^ 
although, to be sure, there is a great gap between 
the lowest of them and the highest of the ani- 
mals. The Negritos of the Philippines, the Ved- 
dahs of Ceylon, the Fuegians of South America, 
and the Australian aborigines afford illustrations. 
Take, for example, some of the tribes of central 
Australia. They are described as wandering about 
in small groups of one or two families, camping at 
favorite spots where the food is abundant. There 
is no such thing as a chief of the tribe. In their 
ordinary condition they are almost completely 
naked, for the idea of making any kind of cloth- 
ing as a protection against the cold does not seem 
to have entered their minds, notwithstanding the 
fact that the temperature at times falls below the 
freezing point. Their habitation is merely a rough 
covering of shrubs for protection against the wind. 
Time is no object to them, and if there be no lack 
of food, the men and women lounge about while the 
children laugh and play. When they are hungry, 
the women, armed with digging sticks and pitchis 
(wooden troughs for carrying food), search for liz- 

* Darwin, on first seeing the Fuegians, wrote : " It was without 
exception the most curious and interesting spectacle I ever beheld : 
I could not have believed how wide was the difference between 
savage and civilized man : it is greater than between a wild and 
domesticated animal, inasmuch as in man there is a greater power 
of improvement." — " Journal of Researches into the Natural His- 
tory and Geology of the Countries visited during the Voyage of 
H. M. S. Beagle around the World," New York, 1873, p. 205. 



ards and small marsupials, while the men look for 
larger game. Everything that is edible is used for 
foo4, the honey-ants being a favorite dish. They 
know the use of fire, but they have little in the way 
of implements besides the spear, shield, spear- 
thrower, boomerang, stone knives, and, rarely, 
hatchets. When times are prosperous they are 
light-hearted ; but there is always an undercurrent 
of anxious feeling which may assert itself, and 
then they think of some hostile medicine man who 
may be trying to harm them with his evil magic. 
They decorate their bodies with scars, and ob- 
serve a strict code of custom and ceremony. If 
a man's ancestor painted a white line across his 
forehead in the performance of a certain cere- 
mony, for example, that line he must also 

The North American Indians offer especially 
good material for studying the hunting and fish- 
ing stage because of their varying degrees of 
development within that stage. In the northern 
and western part of the continent we find purely 
hunting tribes that did not cultivate the soil ; in 
the eastern half of what is now the United States 
a simple kind of soil cultivation was generally 
practised; and the village Indians of New Mexico, 
Mexico, and Central America depended almost ex- 
clusively upon the produce of their fields for sub- 

1 This description is taken from Spencer and Gillen*s " The 
Native Tribes of Central Australia/' London, 1899, Ch. I, 



sistence, used irrigation, and built houses usually 
more than one story high.^ 

This last group of tribes, indeed, might be put 
in the agricultural stage, although they did not 
use domesticated animals in tilling the soil. Con- 
fining our attention, then, to the first two groups, 
let us ask what are the characteristics of man in 
this first stage of economic development. 

The life of primitive man is nomadic. An early 
writer says, " From the first land (which is New- 
foundland) to the country of the Armouchiquois^ 
a distance of nearly three hundred leagues, the 
people are nomads, without agriculture, never 
stopping longer than five or six weeks in a 
place." 2 And another: "They (the Sioux) live 
on wild oats . . . and by hunting. . . . They 
have no fixed Abode, but travel in great Com- 
panies like the Tartars^ and never stay in one 
Place longer than the Chace detains them/*^ Such 
a wandering life is plainly necessary so long as 
people depend on what they can find for a living. 
This characteristic applies to a less extent to the 
more advanced tribes of the East and South,* who 

* Morgan, " Houses and House Life of the American Aborig- 
ines," United States (leographical and Geological Survey, " Con- 
tributions to North American Ethnology," Vol. IV, p. 42. 

* Lescarbot, "La Conversion des Sa wages, 1 610," in "The 
Jesuit Relations and Allied Documents," edited by Reuben Gold 
Thwaites, 73 vols., Cleveland, 1 896-1901, Vol. I, p. 83. 

* Charlevoix, "Voyage to Canada," London, 1763, p. no. 

* Jones, " Antiquities of the Southern Indians," New York, 1873, 
p. 297. 



had learned to cultivate the soil.^ The Indians of 
Pennsylvania, for example, raised maize, potatoes, 
beans, pumpkins, squashes, cucumbers, melons, 
and occasionally cabbages and turnips.^ 

The method of soil cultivation forms another 
characteristic of this stage. It has been aptly 
termed "hoe culture." The work was done by 
hand with the aid of sticks and rude hoes and 
spades made of bones, shells, or stone.^ In a 
Southern tribe the men broke up the surface of 
;the ground with fish bones attached to wooden 
handles, and after them came the women, who, 
with the aid of sticks, made holes into which they 
dropped the beans or grains of corn which they 
carried in small baskets.* Ploughs and draught 
animals were not used. The field labor was done 
chiefly by the women,^ although the men occasion- 
ally helped. In fact, one writer says that the 

^ The extent to which the Indians relied on the products of their 
fields for subsistence is a matter of some doubt. In some cases it 
may have been the chief source (Jones, loc, citf p. 308), but not 
as a rule. The best general reference on the subject is "The 
Mounds of the Mississippi Valley/* by Lucien Carr, Annual Report 
of the Board of Regents of the Smithsonian Institution, 1891, 
Vol. I, pp. 507 fl. 

* Heckewelder, " An Account of the History, Manners, and Cus- 
toms of the Indian Nations, who once inhabited Pennsylvania and 
the Neighboring States." Published in Transactions of American 
Philosophical Society, Philadelphia, 181 9, Vol. I, p. 184. 

8 Abbott, "Primitive Industry,*' Salem, Mass., 1881, Ch. XVI. 

* Jones, "Antiquities of the Southern Indians," p. 301. 

* Hugh Jones, " Present State of Virginia," 1724, reprinted, 
New York, 1865, p. 9. 



Iroquois are the only tribe among whom it cannot 
be shown that the warriors did take some part 
either in clearing the ground or in cultivating the 
crop.^ To illustrate the fact that the women were 
the toilers while the men devoted their attention to 
hunting and fighting, it is not necessary to go to 
the accounts of early travellers. The same divi- 
sion may be seen among the Indians on their 
reservations. The woman's work in a Colorado 
reservation is thus described : " Each day, as the 
sun descends, she and her daughters come into 
the village from the timber valleys loaded with 
firewood — the load weighing from twenty to one 
hundred pounds; she rises first in the morning, 
and builds the fire and prepares the breakfast . . . ; 
as soon as this is over she is out in the sun stretch- 
ing or dressing buckskin or buffalo hides, or strok- 
ing down beaver or otter skins, or cutting out 
garments, or sewing or ornamenting them with 
bead work or embroidery, often in a neat, artistic 
manner, with symmetrically flowing lines; and, 
except in rare cases, she has no idle hours. The 
truth is, an Indian village is, so far as the women 
are concerned, as full of active industry as any fac- 
tory village of New England. Meanwhile the men 
have nothing to do.**^ 

1 Carr, loc, cit,^ p. 511. See also "The Jesuit Relations and 
Allied Documents," Vol. LXV, p. 133. ^ 

* N. C. Meeker, in the Greeley (Colo.) Tribune^ December 11, 
1878, quoted in Boyd's " History of Greeley and the Union Colony 
of Colorado," Greeley, 1890, p. 328. 



In an unsettled life, where labor in the fields 
forms but a minor part, if any, of the food-getting 
activities, there is not much opportunity for the 
development of the institution of slavery. There 
was little incentive to refrain from killing the cap- 
tives taken in battle, and when the lives of the 
prisoners were spared, it was very common for 
them to be adopted as members of the tribe. 
Speaking of the captives, one writer says, " Many 
are killed, but if one outlives this trial, he is 
adopted into a family as a son, and treated with 
paternal kindness; and if he avoids their suspi- 
cions of going away, is allowed the same privileges 
as their own people." ^ Heckewelder says, " The 
prisoners are generally adopted by the families of 
their conquerors in the place of lost or deceased 
relations or friends, where they soon become 
domesticated and are so kindly treated that they 
never wish themselves away again/* ^ On the 
other hand, slaves were held to some extent and 
compelled to work. Of certain Canadian tribes, 
La Hontan says, "The Women Slaves are em- 
ployed to Sow and Reap the Indian-Corn ; and the 
Men Slaves have for their Business the Hunting 
and Shooting where there is any Fatigue, tho' 
their Masters will very often help them." ^ One 

1 Filson, "The Discovery, Settlement, and Present State of 
Kentucky," New York, 1793, p. 102. 

2 Loc, HLy p. 211. 

* La Hontan, "New Voyages to North America," London, 1703, 
Vol. II, p. 18. 



of the early Jesuits ^ speaks of three classes of 
slaves among the Iroquois; and General Ely S. 
Parker,^ himself an educated Iroquois, says the 
captives helped the women. 

Let us turn now to the mental and moral char- 
acteristics of people in this stage, so far as they 
have an economic bearing. Professor Franklin H. 
Giddings ^ has called attention to their unbusiness- 
like way of doing things, and certainly one cannot 
read the constant references by missionaries and 
travellers to the large part that magic and ceremony 
played in their lives, without agreeing that this is 
a most prominent characteristic. Charlevoix gives 
the following instance : " When a Bear is killed, the 
Hunter puts the End of his lighted Pipe between 
his Teeth, blows into the Bowl; and thus filling 
the Mouth and Throat of the Beast with Smoak, 
he conjures its Spirit to bear no Malice for what 
he has just done to the Body, and not to oppose 
him in his future Huntings." * In September the 
Karoks have a great dance to propitiate the spirits 
of the earth and the forest in order to prevent dis- 
astrous land-slides, forest fires, earthquakes, drought, 
and other calamities.^ The Ojibway Indians, in 

i"The Jesuit Relations and Allied Documents," Vol. XLIII, 
p. 293. 2 In a letter quoted by Carr, loc cit, 

• The Political Science Quarterly, in an article entitled, "The 
Economic Ages," June, 1901, Vol. XVI, p. 202. 

* " Voyage to Canada," p. 57. 

fi Powers, "The Tribes of California," United States Geographical 
and Geological Survey, "Contributions to North American Eth- 
nology," Vol. Ill, p. 28. 

I> 33 


Canada, make a feast before commencing to gather 
the rice, and none are allowed to gather the grain 
until after it.^ The Dakotas set apart the first 
corn or wild rice of the season, and the first duck 
or goose killed when they appear in the spring, 
for a holy feast, at which those Indians only who 
are entitled to wear the badge of having slain an 
enemy are invited.^ Lumholtz ^ found a village of 
Mexican Indians having twenty-five shamans or 
priest-doctors for only i8o households. Loskiel* 
says that before an Indian sets out for a long hunt, 
he usually shoots one or more deer and keeps 
a feast of sacrifice, inviting the old men to assist 
him in praying for success. If he shoots nothing 
for several days, he swallows a small dose of a 
preparation made by the old men who are no 
longer able to hunt. Father Le Petit says of the 
Natchez : " They never plant their fields without 
having first presented the seed in the temple with 
the accustomed ceremonies.** ^ 

Another prominent characteristic is their child- 
ish lack of forethought. A missionary among the 
Ojibways^ says that from January to March is 

1 Jenks, "Wild Rice Gatherers of the Upper Lakes," p. 109 1. 
Reprinted from Nineteenth Annual Report of the Bureau of Eth- 
nology. 2 jjjifji^ 

^ Lumholtz, "Unknown Mexico," New York, 1902, p. 312. 

* Loskiel, " History of the Missions of the United Brethren 
among the Indians in North America," translated from the German, 
London, 1 794, p. 76. 

6 "The Jesuit Relations and Allied Documents," Vol. LXVIII, 
p. 139. ® Minnesota Historical Society Gjllectiops, Vol. IX, p. 72, 



their starving time, although a very few days' 
labor would have raised all the corn and potatoes 
they could use. Often when suffering severely 
from hunger in the dead of winter, they bitterly 
lament their own improvidence, and vow that if 
they live till spring they will do differently. But 
when the abundance of summer comes the starving 
of the past winter is forgotten ; the time is passed 
in dancing and pleasure, with no thought for the 
future and no provision made for it. All the 
Indians who are middle-aged recall the severe 
starvation to which when young they were peri- 
odically subjected, and through which they hardly 
lived. Loskiel says the Iroquois preserved their 
crops in round holes dug in the earth at some dis- 
tance from the houses, lined and covered with dry 
leaves or grass ; but if the winter happened to« be 
severe, and the snow prevented them from hunting, 
a general famine ensued, by which many died.^ 
An Apache woman at one of the military posts in 
eastern Arizona, on receiving her rations for the 
week, consumed all of them at a sitting, trusting to 
her ability to find sufficient food to sustain her until 
next ration day.^ " I told them that they did not 
manage well," says Father Le Jeune, of the Cana- 
dian Indians, **and that it would be better to reserve 
these feasts for future days, and in doing this they 
would not be so pressed with hunger. They laughed 


1 Loc, cit., p. 68. 

2 Hoffman, « The Menomini Indians," Fourteenth Annual Re- 
port Bureau of Ethnology, Pt. I, p. 287. 



at me. * To-morrow (they said) we shall make 
another feast with what we shall capture.' Yes, 
but more often they captured only cold and wind." ^ 
Of course, thought for the future was not entirely 
lacking. The more advanced tribes had made 
evident progress in this direction. The Indians 
of North Carolina had corn-cribs,^ and the villages 
of the Cherokees are said to have abounded with 
" hogs, poultry, and every thing sufficient for the 
support of a reasonable life.**^ But man's fore- 
thought had to undergo a tremendous development 
before a modern civilized life was possible. To 
this we shall recur again. 

Another thing that we must notice about this 
early stage is communal life. There were no 
starving poor among them, unless they all were 
starving. "Every citizen," says Bartram,* "has 
free access to the public granary when his own 
private stores '^re consumed." Private property 
in land was not thought of, although possibly a 
slight beginning in this direction may be seen in 
the separation of the patch cultivated by one 
family from the next adjacent one by a strip of 
grass or other boundary.^ Articles of personal 

1 "The Jesuit Relations," Vol. VI, p. 283. 

2 Lawson, "History of North Carolina (1714)," Raleigh, i860, 

p. 35. 

* Adair, " History of the North American Indians," London 

1775* P- 230. 

* " Travels through North and South Carolina, etc.," Philadel- 
phia, 1 791, p. 512, and La Hontan, loc. cit., Vol. II, p. 7. 

^ Bartram, p. 512. 



use were, however, recognized as belonging to 
tiieir users. This does not necessarily indicate a 
conception of ownership such as ours, but the 
things were looked upon as a part of the person- 
ality of the user.^ "They are accustomed," one 
writer remarks, "to take everything that belongs 
to the deceased, skins, bow, utensils, wigwams, 
etc., and bum them all, howling and shouting 
certain cries, sorceries, and invocations to the evil 
spirit."^ Living in common has often appealed to 
people as something unselfish, and a condition to 
which we should, if possible, return. But whatever 
the future may make possible, whether or not a 
man might some day, as John Stuart Mill suggests, 
dig and weave for his country as eagerly as he 
fights for it, it is clear that in this early stage 
some powerful incentive was necessary to encour- 
age men to labor steadily and take thought for the 
future. That incentive was to be furnished above 
all by the institution of private property. 

When people live on what they find, as in the 
purely hunting stage, there is little occasion for 
the development of trade. On the contrary, war 
with the surrounding tribes is the rule. The 
development of commerce and the diminishing 
frequency of war have steadily accompanied an 
advancing civilization. It is interesting to note, in 
passing, the close connection between gift-giving 

1 See Veblen, "The Beginnings of Ownership," American four- 
nal of Sociology, ^avtTCihtXf 1898. 

2 "The Jesuit Relations and Allied Documents," Vol. I, p. 169. 



and trade among the American Indians. To accept 
a present was to bind oneself to return an equiva- 
lent A missionary among the Canadian Indians 
says they brought him some elk meat, and know- 
ing that they expected a present also, he asked 
what they wanted. They desired wine and gun- 
powder, but when they found they could not get 
it, they carried back their meat^ This seems to 
be general among primitive people. 

What has been said about hunting tribes applies 
in the main to those who derive their main suste- 
nance from fishing. Fishing may have been an 
earlier occupation of mankind than hunting, but it 
offers greater possibilities for development when 
the tribe lives near the seacoast. A more station- 
ary and less warlike life is possible, because the 
food supply is not so easily exhausted in one place, 
and there is great opportunity for the development 
of skill in fashioning contrivances for catching fish. 
The inhabitants of the South Sea Islands made 
salmon nets "forty fathoms long and twelve or 
more feet deep."^ When a chief desired to make 
such a net, he called upon the other chiefs for 
assistance, — an instance of the development of 
social cooperation. 

So long as man depends upon what Nature 
furnishes of her own accord, he does not make 

1 "The Jesuit Relations and Allied Documents," Vol. VI, pp. 
7 and 257. 

2 Ellis, '* Polynesian Researches," 2d ed., London, 1831, Vol. I, 
pp. 140(1. 



much progress. It is only when he learns to want 
many things and to labor steadily that she gives up 
her treasures. He had to learn, also, to cooperate 
with the members of other tribes instead of trying 
to kill them. 

III. The Pastoral Stage 

A great step in advance was made by man when 
he learned to utilize domesticated animals for food 
and work. He seems first to have tamed animals 
for amusement. An early traveller says : " There 
are few Villages in france where there are more hens 
and Cocks than in that of the houmas [a Choctaw 
tribe] because they never kill any, and will not 
even eat any of those that their Dogs quite often 
kill. When one wishes to obtain chickens from 
them, He must not say that he intends to kill or 
eat them."^ Cortes says there were in Mexico 
three hundred men whose sole employment it was 
to take care of the emperor's pet birds.^ In Africa 
we find the Ovambo, " very rich in cattle and fond 
of animal diet, yet their beasts would seem to be 
kept for show rather than for food.'*^ 

The American natives did not reach the pastoral 
stage from their own development. In South 
America the llama and alpaca were domesticated, 

1 "Gravier's Voyage," lycx), "Jesuit Relations and Allied Docu- 
ments," Vol. LXV, p. 151. 

2 " Despatches of Hernando Cortes," translated by George 
Folsom, p. 122. 

• Anderson, " Four Years in the Wilds of Africa," Philadelphia, 
1856, p. 153. 



while nearly all the Indians had dogs, and Major 
J. W. Powell thinks that in time they would have 
learned to domesticate the bison.^ Since the arrival 
of the whites, the Navajo Indians in northeastern 
Arizona have become a pastoral people. One 
observer 2 describes them as follows: "The region 
is especially adapted for sheep culture, and the 
Navajo equally well adapted for shepherds, coin- 
ciding circumstances which have happily influenced 
their destiny, transforming them wholly into a 
peaceable, pastoral tribe. Every family is pos- 
sessed of a flock of sheep and goats and a band 
of horses. ... To maintain the flocks in suffi- 
cient pasture, they move them to different grazing 
grounds, at least twice a year. . . . Vivid tradi- 
tions are still extant of those early times before the 
Spaniard brought sheep and horses to their land, 
when they lived on the spoil of the chase, on wild 
fruits, grass seeds, and pifion nuts. Indian corn, 
however, was known to them apparently from the 
earliest times, but while they remained a mere 
hunting tribe, they detested the labor of planting. 
But as their numbers increased, the game, more 
regularly hunted, became scarce, and to maintain 
themselves in food, necessity forced them to a 
more general cultivation of corn, and the regular 

1 In his article on the American Indians, in " The United States 
of America," edited by N. S. Shaler, New York, 1894, Vol. I, p. 251 ; 
but Professor Shaler (" Domesticated Animals," New York, 1895, 
p. 106) says the bison seems to be essentially undomesticable. 

2 A. M. Stephen, "The Navajo," American Anthropologist^ 
Vol. VI, p. 347. 



practice of planting became established among 

The Todas of India, who live chiefly from their 
herds of buffaloes, have a tradition of ^ time when 
they subsisted on roots.^ " The move upward from 
the life of the hunter to that of the herdsman," 
says Tylor, "is well seen in the far North, the 
home of the reindeer. Among the Esquimaux, the 
reindeer was only hunted. But Siberian tribes not 
only hunted them wild, but tamed them." ^ For 
further illustrations of existing pastoral peoples, 
we may mention the nomads of central Asia and 
some of the Arabian and other African tribes. 

It is not intended to assert here that all peoples 
have once been pastoral nomads. Such a life 
depends in large measure upon physiographic 
conditions. The steppes of central Asia, with 
their extremes of temperature, offering pasturage 
during but a part of the summer, and becoming an 
inhospitable desert at another, are peculiarly suited 
to nomadic pastoral life. Similarly, in part of the 
arid belt of the United States, cattle-raising is 
almost the sole occupation.® It may well be that 
the first cattle were domesticated by peoples that 
had already learned to carry on hoe culture* in 
permanent villages, so that these never became 
pastoral nomads, deriving their main subsistence 

1 Marshall, "Travels amongst the Todas," London, 1873, p. 82. 
* "Anthropology," New York, 1891, p. 219. 
» Roosevelt, " Ranch Life and the Hunting Trail," New York, 
1899* p. I. * See ante, p. 30. 



from their animals,^ but inasmuch as we can trace 
back the history of many civilized peoples^ to a 
time when cattle-raising was their chief occupation, 
it does not seem improper to make the pastoral life 
a separate stage in human development. It typi- 
fies a great human achievement. It is in those 
regions in which an agricultural life presents 
special difficulties that an arrested development 
has preserved for us in some measure a record of 
the influence of that change. In our own history 
we have an epitome of the world's experience in 
this respect. In the words of Professor F. J. 
Turner, "The United States lies like a huge page 
in the history of society. Line by line, as we read 
this continental page from west to east, we find the 
record of social evolution. It begins with the 
Indian and the hunter ; it goes on to tell of the dis- 
integration of savagery by the entrance of the 
trader, the pathfinder of civilization. We read 
the annals of the pastoral stage in ranch life ; the 
exploitation of the soil by the raising of unrotated 
crops of corn and wheat in sparsely settled farming 
communities ; the intensive culture of the denser 
farm settlements; and finally, the manufacturing 
organization with city and factory system." ^ That 
is, the cattle-raising frontier has given away coji- 

^ Cf. SchmoUer, " Grundriss der allgemeinen Volkswirtschafts- 
lehre," Leipzig, 1900, pp. 195 and 196. 

2 See below, pp. 43-45. 

^ " The Significance of the Frontier in American History," 
Annual Report of the American Historical Association for 1893, 
Washington, 1894, p. 207. 



tinually to higher stages, except in the regions 
where for a time, or permanently, agriculture has 
not been possible, namely, in the arid belt. 

In this second stage man relies less directly upon 
nature for his food. He learns to take more 
thought for the future. . His herds and flocks 
represent a body of social capital which must be 
preserved intact, and of which the increase only 
can be used. There is a development of the 
institution of private property, not as yet in land, 
but in movable wealth, and in consequence we are 
not surprised to find the contrast between rich and 
poor making its appearance. Among the Kirghiz 
of central Asia only the rich have more than one 
wif e.^ A murder is paid for with six hundred head 
of cattle. Borrowing at interest and rules con- 
cerning the inheritance of property make their 
appearance.^ Warlike habits continue; the men, 
although extremely lazy and slovenly, are brave 
and capable of undergoing great hardship. There 
is no special development of the arts nor of sla- 
very, for these are especially characteristic of a 
relatively peaceful existence. 

IV. The Agricultural Stage 

The change from the pastoral to the agricultural 
stage may be exemplified from the history of the 
Jews. In Genesis we read: "And Abram was 

1 Moser, "Durch Central- Asien," Ch. II, Leipzig, 1888. 
a Lansdell, " Russian Central Asia," Boston, 1885, Vol. I, Chs. 



very rich in cattle, in silver, and in gold. . . . And 
Lot also, which went with Abram, had flocks, and 
herds> and tents. . . . And Abram said unto Lot, 
Let there be no strife, I pray thee, between me and 
thee, and between my herdmen and thy herd- 
men; for we be brethren." But in Samuel the 
agricultural stage is suggested: "And he will 
appoint him captains over thousands and captains 
over fifties, and will set them to ear his ground, 
and to reap his harvest, and to make his instru- 
ments of war, and instruments of his chariots. . . . 
And he will take your fields, and your vineyards, 
and your oliveyards, even the best of them, and 
give them to his servants." ^ In Spencer's " De- 
scriptive Sociology," the food-getting aspect of the 
early history of the Hebrews is divided as fol- 
lows : — 

"Pre-Egyptian period: Reared sheep, oxen, asses; a 
slight beginning of agriculture. 

Egyptian period : Love for settled abode and agriculture 
seems to have been implanted. 

Period of the Judges: Transjordanic tribes continued 
shepherds; the rest passed on to agriculture. 

Period of the Monarchy : Wheat and olives were culti- 
vated in such a measure as to allow of extensive ex- 

Period of the Two Kingdoms : Agriculture made more 
extensive by terracing and watering. Wheat the chief 

The German tribes afford another illustration of 

^ I Sam. viiL 12, 14. 


the passage from the pastoral to the agricultural 
stage. They migrated with their cattle into Europe, 
and later became settled cultivators of the soil.^ 

A third illustration may be taken from the his- 
tory of England. Professor W. J. Ashley* says 
on this point that " to judge from the account given 
by Caesar — who had abundant opportunities of ob- 
servation — the Britons, at the time of Caesar's in- 
vasion, were still, except in Kent, in the pastoral 
stage. . . . When, however, we pass to the three 
centuries and a half of Roman rule, we can hardly 
help coming to the conclusion that it was during 
that period that England became an agricultural 

Still another example is to be found in the his- 
tory of the Greeks. " Homeric social forms," says 
a recent writer, " witness the long-continued pres- 
ence of the nomadic stage, now passing away as a 
result of changed environment. It is probable 
that the dominant peoples of Greece and Asia 
Minor were a detachment of those nomadic con- 
querors who ever and anon swept forth from the 
plains of central Asia, infusing fresh blood and 
vigor into the societies with which they came in 

1 See Hildebrand, " Recht und Sitte auf den verschiedenen 
wirtschaftlichen Kulturstufen," Erster Theil, Jena, 1896 ; and Meit- 
zen, " Siedelung und Agrarwesen," Berlin, 1895, Vol. I, p. 131 ; and 
compare Ashley, " Surveys Historic and Economic," New York, 
1900, pp. 157-160, and pp. 1 1 5-1 31. 

^ In the Introduction to " The Origin of Property in Land," by 
Fustel de Coulanges, translated by M. Ashley, London, 1892, pp. 



contact." ^ It should be noted, however, that in 
this case the pastoral life had not resulted in 
domesticating those animals which are necessary 
to agriculture. While the Greeks were nomads 
they had chiefly sheep and goats, and it is prob- 
able that the ox, the horse, and the mule came to 
them after their western migrations and settle- 

This change to a settled life with agriculture as 
the chief occupation is accompanied by profound 

Number of Inhabit- 
ants PER Square 

Hunting tribes, such as the Bushmen, Pata- 
gonians, Australians 

Hunting tribes, with some soil cultivation such 
as the Indians and poorer negroes . 

Fishing peoples living on the coast, as in north- 
western America and Polynesia 

Pastoral nomads 

Tribes with hoe culture and agriculture and 
some industry and commerce (inner Africa, 

Purely agricultural regions of southern Europe 

Mixed agricultural and industrial regions of 
central Europe. 

The better cultivated regions of India, Java, 
China . 

Regions of the great commercial cities and 
industrial centres of Europe 



as many as 1.77 

as many as 70 




(Condensed from an estimate by Ratzel, quoted in Schmoller's 
■ Grundriss der allgemeinen Volkswirtschaftslehre," p. 183.) 

1 Keller, "Homeric Society," New York, 1902, p. 30. 

2 Ibid., p. 37. 



changes in the whole social structure. Partly as 
a cause and partly as a result of the changed 
methods of getting a living, there is a marked 
increase in the density of the population, and this 
necessarily implies new social relations and duties. 
The table on page 46, showing the density of popu- 
lation in typical regions of the world, will em- 
phasize the fact that the growth of civilization 
has meant an ever increasing closeness and com- 
plexity in the relations of man with man. 

Another prominent characteristic is the great 
development of slavery. This had existed in 
previous periods, but to hunters and herdsmen, 
large bodies of slaves would have been a detri- 
ment, not an advantage, and therefore the slaughter 
of enemies was common. The Masai in East 
Africa, says Ratzel, are a shepherd tribe, who sub- 
sist upon herds of a fixed size, and have neither 
labor nor provision to spare for slaves, and hence 
kill their prisoners; "their neighbors, the agricul- 
tural and trading Wakamba, being able to find a 
'use for slaves, do not kill them." ^ In the early 
history of Greece, slavery was a much less impor- 
tant institution than it became at a later period. 
In Homer's time, the male captives taken in war 
were usually slain, and only the women and chil- 
dren enslaved, since the social organization " was 
not yet strong enough to hold in subjection bodies 
of grown men." 2 

* •* History of Mankind," translated by A. J. Butler, London, 
1896, Vol. I, p. 123. a Keller, " Homeric Society," p. 277. 



But in more advanced societies, like the Egyp- 
tians, and the later Greeks and Romans, and in 
Europe generally during the Middle Ages, unfree 
labor formed a very important part of the social 
fabric. In China to-day slaves of both sexes are 
openly bought and sold all over the empire, being 
used chiefly in domestic work.^ We are now con- 
vinced that, aside from any moral considerations, 
free labor is more efficient than slave labor; but 
in this early stage of industrial development, labor, 
it is generally maintained, had to be forced if there 
was to be any steady labor at all, and thus slavery 
may be looked upon as a necessary stage in the 
evolution of industrial society. It was only in 
later ages, when the habits of thrift and industry 
had been ground into the very nature of man, that 
the servile bon is could advantageously be removed. 

The gradual growth of private landownership is 
a third characteristic of this period. The actual 
steps by which private landholding came to pre- 
vail is a matter of great dispute among the eco- 
nomic historians.^ We are interested here merely * 
in the result of the institution of a system of pri- 
vate property. Perhaps the magic power of the 
separate cultivation of the soil to increase the 
total product cannot be better brought out than 
by the following quotation, giving the experience 

^ Douglas, " Society in China," London, 1894, p. 346. 

^ For a discussion of the present status of this question see an 
article by G. T. Lapsley, entitled "The Origin of Property in 
hBind" American Historical Reinew^ April, 1903, Vol. VIII, p. 426. 



of the early Puritans in New England. Governor 
Bradford, in the history " Of Plimoth Plantation," ^ 
after telling of the difficulty the colonists had in 
getting a sufficient supply of food under a system 
of common cultivation, says : — 

" So they begane to thinke how they might raise as 
much come as they could, and obtaine a beter crope 
then they had done, that they might not still thus lan- 
guish in miserie. At length, after much debate of things, 
the Gov' (with y* advise of y* cheefest amongest them) 
gave way that they should set corne every man for his 
owne perticuler, and in that regard trust to them selves ; 
in all other things to goe on in y* generall way as before* 
And so assigned to every family a parcell of land, accord- 
ing to the proportion of their number for that end, only 
for present use (but made no devission for inheritance) 
and ranged all boys & youth under some familie. This 
had very good success ; for it made all hands very indus- 
trious, so as much more come was planted then other 
waise would have bene by any means y* Gov' or any 
other could use, and saved him a great deall of trouble, 
and gave farr better contente. The women now wente 
willingly into y® feild, and tooke their litle-ons with them 
to set come, which before would aledg weakness, and 
inabilitie ; whom to have compelled would have been 
thought great tiranie and oppression." 

Experiences such as the foregoing have con- 
vinced the world of the desirability of the private 
cultivation of the soil. Additional reasons are 
perhaps needed to make conclusive the argument 

1 Reprinted in Boston, 1898, p. 162. 
E 49 


for private ownership with the right of inheritance, 
but the present writer believes that they can be 
found. Abuses of private landownership, such 
as the development of excessively large estates, 
are not a necessary part of the institution. Wie 
must presuppose such social regulation as will 
result in the holding of small estates by a rela- 
tively large part of the community. Such a class 
develops a spirit of independence and personality 
that gives stability to the whole social organism. 
However, there is not space at this point to enter 
into a discussion of this subject. 

In the agricultural period there was still little 
development of trade. The village communities 
were isolated and self-sufficient. Each group raised 
and made the things which it needed. The wants 
of the people were simple, and food, clothing, and 
fuel could all be obtained at home. The condi- 
tion of England at the time of the Norman Con- 
quest affords a good illustration. On the manors, 
the needs of the community, says one writer, 
" were satisfied almost wholly from the ploughing 
and tilling of the ground and from the use and 
increase of the domestic animals; what handi- 
workers or craftsmen came into existence were 
mainly for the furthering of these same needs 
rather than for the satisfaction of new tastes or 
the development of new duties. . . . Probably the 
millard, shoemaker, smith and wright were al- 
ready recognized as distinct craftsmen; but all 
others, such as those engaged in spinning, weav- 



ing, netting, salt-preparing, gardening, brewing, 
baking and cooking were, and for a consider- 
able time continued to be, merely household ser- 
vants." ^ Some trade, to be sure, existed. Salt, 
iron, and millstones could usually not be sup- 
plied at home,2 and the higher classes very early 
secured articles of luxury from the wandering 
merchant. Significant of the exceptional nature 
of trade in the early stages of the development 
of industrial society is the fact that both the 
German word " tauschen " and the English word 
"barter" originally meant to " cheat." ^ 

The transition stage to a freer trade between 
the groups is somewhat as follows: "Each pro- 
prietor still seeks, as far as possible, to gain his 
livelihood from the land ; if his wants go beyond 
this, he calls into requisition any special manual 
skill he may possess or any particular productive 
advantage of his district, whether in field, forest, or 
water, in order to produce a surplus of some par- 
ticular article. One will produce grain, another 
wine, a third salt, a fourth fish, a fifth linen 
or some other product of domestic industry."* 
Some of the more favorably situated places be- 
came the centres of the trade, and finally grew 

1 Andrews, "The Old English Manor," Baltimore, 1892, pp. 202, 


* Ashley, " An Introduction to English Economic History and 
Theory," Vol. I, pp. 35-36. 

* Bflcher, " Industrial Evolution," translated by S. M. Wickett, 
New York, 1 901, p. 40. 

* BUcher, p. 1 14. 



into towns. • Most of the eighty towns mentioned 
by the Domesday Survey in England " were what 
we should now consider but large villages : they 
were distinguished from the villages around only 
by the earthen walls that surrounded them, or 
the earthen mounds that kept watch over them.'*^ 
The development of the towns as centres of trade 
and handicraft in Europe generally, during the 
Middle Ages, marks the beginning of a new stage 
in industrial development. 

V. The Handicraft Stage 

This stage sees the rise and decay of the gilds, 
and the spread of the domestic system. It is of 
especial interest to us because it was during this 
period that America was colonized. By the sev- 
enteenth century, the craft gilds had decayed in 
England, and it is not surprising therefore that they 
do not appear in America. In other respects, how- 
ever, there are similarities between the early Eng- 
lish and the early American industrial development. 
For example, in each case an export trade in raw 
products developed before the handicrafts contrib- 
uted largely to the exports, Europe being to England 
in the thirteenth and fourteenth centuries what 
England was to America in the seventeenth and 
eighteenth. A passage from Jefferson's "Notes on 
Virginia" is of interest in this connection. "Our 
exterior commerce," he says, "has suffered very 

1 Ashley, " English Economic* History," Vol. I, p. 68. 


much from the beginning of the present contest. 
During this time we have manufactured within 
our families the most necessary articles of cloth- 
ing. Those of cotton will bear some comparison 
with the same kinds of manufacture in Europe; 
but those of wool, flax, and hemp are very coarse 
and unpleasant; and such is our attachment to 
agriculture, and such our preference for foreign 
manufactures, that, be it wise or unwise, our people 
will certainly return as soon as they can to the 
raising of raw materials, and exchanging them for 
finer manufactures than they are able to execute 
themselves." ^ The following picture of an early 
plantation in Virginia reminds one of an old Eng- 
lish manor that was just beginning to lose its 
self-sufficiency : — 

" Worthy Captaine Matthews^ an old Planter of above 
thirty years standing, one of the Counsell, and a most 
deserving Common-wealths- man, I may not omit to let 
you know this Gentlemans industry. 

" He hath a fine house, and all things answerable to it ; 
he sowes yearly store of Hempe and Flax, and causes 
it to be spun ; he keeps Weavers, and hath a 7kn-house, 
causes Leather to be dressed, hath eight Shoemakers em- 
ployed in their trade, hath forty Negroe servants, brings 
them up to Trades in his house : He yeerly sowes 
abundance of Wheat, Barley, &c, TTie Wheat he selleth 
at four shillings the bushell ; kills store of Beeves, and 
sells them to victuall the ships when they come thither : 
hath abundance of Kine, a brave Dairy, Swine great store, 

1 Edition of 1801, p. 323. 


and Poltery [poultry] ; he married the daughter of Sir. 
Tho, HintoHy and in a word, keeps a good house, lives 
bravely, and [is] a true lover of Virginia ; he is worthy 
of much hononr [-our]." ^ 

In the northern colonies there was a special 
development of fishing, lumbering, and shipbuild- 
ing. The so-called manufacturing was done chiefly 
in the household, and, as in England, closely allied 
with agriculture. Brissot de Warville, in his " New 
Travels in the United States of America, performed 
in 1788,*' says, "Almost all these houses are in- 
habited by men who are both cultivators and arti- 
sans ; one is a tanner, another a shoemaker, another 
sells goods, but all are farmers*' (p. 127). Tench 
Coxe, in his "View of the United States, 1 787-1 794" 
says : " Those of the tradesmen and manufacturers 
who live in the country, generally reside on small 
lots and farms from i acre to 20 : and not a few 
on farms from 20 to 150 acres; which they culti- 
vate at leisure times, with their own hands, their 
wives, children, servants, apprentices, and some- 
times by hired laborers. . . . This union of manu- 
facturing and farming is found to be very convenient 
in the grain farms, where part of almost every day 
and great parts of every year can be spared from 
the business of the farm and employed in some 
mechanical handicraft or manufacturing busi- 

1 From an anonymous letter written in 1648, printed in Hart's 
" Source-Book of American History," p. 91. For a picture of plan- 
tation life in later times, see "The Old South," by Thomas Nelson 
Page, New York, 1892, pp. 143 ff. 



ness " (p. 378). In Maryland, in the eighteenth 
century, the parson had his glebe, the lawyers and 
doctors had their farms. " The mechanics, fisher- 
men, bay sailors, and petty tradesmen took a turn 
in the tobacco fields at planting time or helped in 
the wheat harvest, or in pulling and husking corn." ^ 

Both countries, too, offer illustrations of another 
characteristic of the handicraft stage : the substitu- 
tion of a money for a barter economy. The earliest 
of the kings in England after the Conquest received 
their dues from manors in kind, but Henry I found 
it possible to collect them in money. So, in Amer- 
ica, the earliest taxes were paid in commodities. 
The following quotation from the " Records of the 
Colony of New Plymouth" for the year 1677 will 
be of interest : " The court voated that barly 
shalbe paied for the rate this yeer att three shillings 
a bushell. The proportions aboue entered \_i.e. 
amount assessed to each town] are to be payed, two 
ptes of three thereof in wheat, and barly, and butter, 
or siluer, the wheat att 4' a bushell, the barly att 
three shillings a bushell, and the butter att fiue pence 
a pound, this first payment to be made att or before 
the first of October next after the date heerof, and 
the other third pte to be payed in Indian come and 
rye, the Indian corne att three shillings a bushell, and 
the rye att three shillings and six pence a bushell." ^ 

The early colonial period also offers some parallel 
to English conditions in the minute regulation of 

1 Scharf, "History of Maryland," Vol. II, p. 58. 

2 Reprinted in Boston, 1856, Vol. V, p. 243. 



economic affairs by the government. The Boston 
town records show that the price and size of a loaf 
of bread was repeatedly fixed by public authority. 
Competition was not relied upon to fix a price. In 
the records of 1635 there is a resolution: "That 
Mr. William Hutchinson, Mr. William Colborne 
and Mr. William Brenton shall sett pryces upon all 
cattell comodities, victuals and labourers and Work- 
men's Wages and that noe other prises or rates 
shalbe given or taken." * The absence of the idea 
of a competitive price is further shown by the fol- 
lowing incident, related by Governor Winthrop in 
his Journal: A keeper of a shop in Boston was fined 
two hundred pounds because he took above six pence 
in the shilling profit. " After the court had censured 
him the Church of Boston called him also in ques- 
tion where (as before he had done in the court) he 
did with tears acknowledge and bewail his covetous 
and corrupt heart, yet making some excuse for 
many of the particulars which were charged against 
him." This gave the occasion to Mr. Cotton to lay 
down the rules for trading, the first of which was : 
" A man may not sell above the current price (i.e.) 
such a price as is usual in the time and place, and 
as such who knows the worth of the commodity 
would give for it if he had occasion to use it, as 
that is called current money which every man will 
take, etc." 2 

1 Second Report of the Record Commissioners of Boston, p. 5. 

2 "Governor Winthrop's Journal," printed at Hartford, 1790, 
p. 188 ; Reprint of 1853, pp. 377-38i. 



These slowgoing methods of the handicraft sys- 
tem, where every man worked for himself with his 
own tools, or for other persons who were not far 
above him in the social scale, began to give way to 
the factory system in England in the last quarter 
of the eighteenth and in America in the first quar- 
ter of the nineteenth century. Of course, there 
is no intention of saying that they were entirely 
superseded, for many of the characteristics of one 
stage in industrial development are carried over 
into the next. In the garment trade the eighteenth 
century methods are being displaced with extreme 
slowness, and in many lines some hand-work will 
find a permanent place. The names we give to the 
various stages merely designate what is dominant 
in each stage. 

VI. The Industrial Stage 

The use of power manufacture, made possible 
by the great mechanical inventions in the latter 
part of the eighteenth century, brought about that 
far-reaching and rapid change in our industrial life 
which is known as the Industrial Revolution. It 
ushered in the era of capitalism, the wage system, 
and the extensive use of credit. It now became 
necessary for the laborers to leave their homes 
and assemble in factories to use the expensive 
machinery which each one could not own for 
himself. To an increasing extent, those supply- 
ing the factors of production become separated. 
In a particular business one set of persons might 



furnish the capital, an entirely different set the 
labor, and still a third the land. Under such con- 
ditions, the organizer, the entrepreneur^ receives a 
new importance, arid captains of industry are made 

There was at the same time a great change in 
men's ideas as to the duties of the state toward 
industry. Non-interference became the watchword, 
and the abuses that resulted in the English facto- 
ries from this unregulated competition were truly 
appalling. In America, the evils were not so 
great. Chevalier, writing in 1834, testifies on this 
point as follows : " The cotton manufacture alone 
employs six thousand persons in Lowell ; of this 
number nearly five thousand are young women 
from seventeen to twenty-four years of age. . . . 
On seeing them pass through the streets in the 
morning and evening and at their meal hours, 
neatly dressed ; on finding their scarf s and shawls 
and green silk hoods, which they wore as a shelter 
from the sun and dust (for Lowell is not yet 
paved), hanging up in the factories amidst the 
flowers and shrubs, which they cultivate, I said to 
myself, * This, then, is not like Manchester ; ' and 
when I was informed of the rate of their wages, I 
understood that it was not at all like Manchester. 
. . . After spending four years in the factories, 
they may have a little fortune of 1^250 or 1^300, when 
they often quit work and marry.'' ^ And yet the evils 

1 " Society, Manners, and Politics in the United States," Boston, 
ed. 1839, p. 137. 



have been great here, also. At about the time when 
the foregoing was written, Seth Luther, a mechanic, 
published a pamphlet in which he sets forth the 
conditions in the factories as he found them.^ The 
New England mills generally ran thirteen hours a 
day the year round, while one in Connecticut ran 
fifteen hours and ten minutes. At Paterson, New 
Jersey, the women and children had to be at work 
at half -past four, and sometimes were urged on by 
the use of the cowhide. At Mendon, Massachu- 
setts, a boy of twelve drowned himself in a pond 
to escape factory labor. The United Hand Loom 
Weavers' Trade Association reported, in 1835, that 
they could earn in twelve hours but from sixty-five 
to seventy-one cents a day. 

The reason that the evils of the change were not 
so great in this country was partly in the fact that 
there was a great supply of free land to which any 
who were dissatisfied with the changing conditions 
could turn, and partly in the fact that we had as 
yet not established a great economic system of 
any kind that could be overthrown. With us the 
change was an evolution rather than a revolution. 
The existence of a great body of unoccupied land 
has, indeed, been one of the most characteristic 
facts of our economic development. It has served 
as a constant force tending to keep up wages in 
the older regions and to furnish an outlet for the 
discontented element. Timothy Dwight speaks of 
this fact in his " Travels in New England and New 

^ See the author's " Labor Movement in America," Ch. III. 


York in 182 1." They had many troubles in the 
older regions, he says, but they would have had 
many more if this discontented element had re- 
mained at home. Our free land has almost dis- 
appeared, and we shall in the future have to find 
a new way to deal with those who are dissatisfied. 
That this will be no easy matter is evident when 
we consider that if the mainland of the United 
States were only half as densely populated as the 
German Empire is to-day, we should have over four 
hundred millions of people under one govern- 

The abuses that appeared with the factory 
system led, in both England and America, to a 
twofold reaction against the laissez-faire policy. 
Competition has been regulated by a series of 
factory acts and other legislation, and workmen 
have been stimulated to more thorough organiza- 
tion to secure for themselves, in the shape of 
higher wages, a part of the increasing wealth. But 
at best, a change from one stage to another must 
always mean loss and suffering to a part of society. 
The methods which were compatible with success 
in the slow-going handicraft stage became inap- 
propriate in a more strenuous competitive period ; 
and those who could not make the change lingered 
behind, and became what has been expressively 
called "the rubbish heap of the competitive sys- 
tem." There was once a strong feeling that those 
who had learned a trade had a sort of vested inter- 
est in it, and ought not to be turned out immedi- 



ately when some other man could be found who 
xnight do the work more cheaply. Custom pro- 
tected the incompetent to some extent from the 
ruthless force of competition, but later they were 
turned adrift to shift for themselves. In many 
>?vays, too, our habits of thought have to be 
changed as we pass from one stage to another. 
This is irksome, and we resist it for a time. The 
idea that a business is a man's own and ought not 
to be interfered with by the public is one that 
"belongs to this early part of the industrial stage, 
and it has been only with extreme slowness and 
obstinacy that it is coming to be recognized by busi- 
ness men that such an attitude is an anachronism. 
Unquestionably the dispute between labor and 
c:apital has been aggravated by this fact. Educa- 
tion can do much here to make the transitions 
easier, because when men recognize the inevitable- 
xiess of a change, they are much less apt to resist 
it. The necessity of discarding one's old habits 
of thought under new conditions can be illustrated 
in another way. The farmers brought up in the 
traditions of the individualism of New England 
and of the South, — where individualism is far 
more pronounced, — on going to the far West, 
iwrhere close association and cooperation were re- 
quired to carry on irrigated agriculture, found that 
it took a long time and involved a good deal of 
waste to learn how to act together. 

This thought has an important application at the 
present time. We are coming to deal more with 


peoples of a lower civilization, and we have to ask 
the question, How rapidly can they move forward 
to a stage of industrial civilization which is removed 
from them by hundreds and perhaps thousands of 
years ? It has been necessary to modify our sys- 
tem of land tenure more or less in the case of the 
North American Indians, to assist them to make 
the transition from common or tribal property in 
land to individual property in severalty as we un- 
derstand it. The question may indeed be asked 
if we are not expecting them to travel too rapidly. 
It is interesting to note that Professor J. W. Jenks, 
in his report upon the Philippines, does not hold 
that the natives are ripe for individual property in 
land, but recommends public ownership with leases. 
This illustrates very important principles of special 
significance to us now. For a long time in this 
country, under the influence of eighteenth-century 
philosophy, we were inclined to regard men as sub- 
stantially equal, and to suppose that all could live 
under the same economic and political institutions. 
It now becomes plain that this is a theory which 
works disaster, and is, indeed, cruel to those who 
are in the lower stages, resulting in their exploi- 
tation and degradation. 

Returning again to the early industrial stage, we 
find that, even after the idea of a regulated com- 
petition had made its way, the ideal which we 
attempted to follow was that the competitive 
struggle, even though regulated, should be main- 
tained in every branch of production. Competition 



among a large number of producers, it was thought, 
would fix a natural price automatically. Legisla- 
tors directed their efforts to maintaining competi- 
tion, even in the railroad business. This general 
reign of competition, at first unregulated and later 
regulated, may be taken to characterize the first 
phase of the industrial era. 

Within the last two or three decades a new 
movement has been taking place. The marked 
concentration of production in large establish- 
ments, commonly called the trust movement, may 
be regarded as a second phase of the industrial 

Agricultural Implements ^ 

Number of 


Average per 



Wage Earners 

Value of 










































stage. It is seen in almost every line of produc- 
tion, although less markedly in some than in 
others. It is to be observed least of all in the 
farming and mercantile business. To illustrate 
the movement, we may take the manufacture of 
agricultural implements. From the above table 

1 Twelfth Census Reports, " Manufactures," R. I, p. Ixxii, 



we notice an absolute decrease in the number, and 
a marked increase in the average size, of the 

But a third phase, quite distinct from the pre- 
ceding, has been attracting attention recently. It 
is the movement toward the integration of allied 
industries. For illustration, take the case of the 
United States Steel Corporation. Here we have 
united under one management the American Bridge 
Company, the American Sheet Steel Company, the 
American Steel Hoop Company, the American 
Steel and Wire Company, the American Tin 
Plate Company, the Federal Steel Company, the 
Lake Superior Consolidated Iron Mines, the 
National Steel Company, the National Tube Com- 
pany, and the Carnegie Steel Company. Of the 
last itself, Mr. Charles M. Schwab says, in his 
testimony before the Industrial Commission (Vol. 
XIII, p. 448): " The Carnegie Company were large 
miners of ore — mined all the ore that they re- 
quired themselves, to the extent of over 4,000,000 
tons per year. They transported a large per- 
centage of it in their own boats over the lakes; 
they carried a large percentage of it over their 
own railroad to their Pittsburg works, and manu- 
factured it there, by the various processes, into 
a great variety of iron and steel articles — I 
think perhaps a larger general variety of steel 
articles than almost any other manufacturing 

Mr. W. F. Willoughby, in a recent article en- 


titled " The Integration of Industry," ^ has given 
the following additional illustrations: The com- 
bination of railroad and ocean transportation ; the 
control by the Standard Oil Company of the Lin- 
seed Oil Company, which itself controls the Na- 
tional Lead Company ; the consolidation of various 
lines of tobacco manufacture; the combining of 
production and distribution at retail by the large 
shoe companies; trust and security companies 
which perform the functions of banks, administra- 
tors of estates, real estate agents, guardians of 
valuables, bonding agencies, and conveyancers of 
property ; the department store (although slightly 
different in principle); and finally, the English 
Cooperative Societies. The force at work, this 
writer thinks, is the same as that which impels a 
nation to become self-contained. This whole mat- 
ter brings us to the heart of present problems, and 
is further discussed in Chapter V of Part I. 

What the industrial age means in the way of in- 
creased facilities for the production of wealth is 
well shown by the elaborate investigation con- 
ducted by the United States Commissioner of 
Labor 2 in regard to the difference between hand 
labor and machine labor. For example, in 1852 
the printing and folding of 480,000 pages of news- 
paper required 3660 hours of work at a labor cost 
of $447, while in 1896 the same amount of work 
was done in 18 hours and 30.3 minutes at a labor 

* In the Quarterly Journal of Economics, Vol. XVI, p. 94. 

* In his Thirteenth Annaal Report. 

F 65 


cost of 1^6.27. Agriculture is one of the latest 
branches of industry to be invaded by machine 
methods, but the progress made in this direction is 
also remarkable. So early as 1851, Mr. Pusey, in 
his Report on Agricultural Implements in the Ex- 
hibition of 185 1, estimated that in the twelve years 
preceding his report "a saving on outgoings or 
else an increase of incomings of not less than one- 
half " had resulted from the increased use of me- 
chanical implements in agriculture.^ The inves- 
tigation just mentioned shows still more rapid 
improvement since that time. For example, to 
produce 40 bushels of corn in 1855 required 38 
hours and 45 minutes of work at a labor cost of 
IJ3.63; while in 1894 that amount could be pro- 
duced by 15 hours and 7.8 minutes of work at a 
labor cost of only $1.51. Whether human well- 
being has on the whole increased in the same pro- 
portions may be doubted, but after taking into 
account all of the evils the new industrial system 
has brought, there is without doubt a large balance 
in its favor, with unbounded possibilities for the 

So far we have been viewing the development 
of society from the standpoint of production. 
Other viewpoints are of course possible. One 
writer 2 has taken as his principle of classification 
the length of time which elapses between the 
production and the consumption of the goods, and 

1 Quoted in Hearn's " Plutology," London, 1864, p. 172. 

2 Biicher, "Industrial Evolution," p. 89. 




from this standpoint he gets the following three 
stages : — 

1. The stage of independent economy. 

2. The stage of town economy. 

3. The stage of national economy. 

The stage of domestic independent production is 
that in which the household is an independent 
group, a well-nigh self-sufficient economic group. 
Goods are produced in and by the household group, 
and are consumed by this group. Economic self- 
sufficiency is the ideal. This stage existed in class- 
ical Greece, and is found in all earlier industrial 
civilizations. The stage of town economy is that in 
which handicrafts are developed. Goods are pro- 
duced by artisans for customers, so that the pro- 
ducer meets the consumer without intermediaries. 
The village shoemaker taking orders from individ- 
ual customers and making their shoes for them is 
a type of this stage. Exchange takes place and 
commerce exists, but on a comparatively simple 
scale. The economic relations among men are 
relatively few and simple. In the stage of national 
economy, production is conducted on a large scale, 
and the goods pass through several hands before 
they reach the consumer. We are now in this 
stage ; and, one may add, the next stage, according 
to this view, would be world economy. The busi- 
ness world is becoming more and more cosmopol- 
itan. The industrial ties binding nations together 
are becoming closer. The money market is truly 



a world market. We hear of the invasion of 
foreign countries by the captains of industry, and 
of the formation of world trusts. 

If we look at the evolution of industrial society 
with respect to the tranfers of goods, we may 
discover three distinct periods, and these follow 
each other chronologically. This was first worked 
out in detail by the German economist, Bruno Hilde- 
brand.^ We have, first, an early stage preceding 
the use of money, which may be designated as 
barter or truck economy. Then we have the 
stage in which money becomes prominent, and 
to this we may give the term money economy, 
and following money economy, we have a third 
period called credit economy. Barter exists in 
the period designated as money economy, but 
what characterizes this period is the use of money, 
which increasingly replaces barter. Similarly, in 
our own time, the third period, money is still 
used, but credit dominates the period to such an 
extent that money has been well called the small 
change of commerce. 

When we look at the evolution of society from 
the standpoint of labor, we find first of all the labor 
of women and the slaughter of enemies. The 
slaughter of enemies was in more advanced civili- 
zations quite generally replaced by slavery. Then 
we observe a transition to a modified form of 
slavery, or serfdom, in Europe generally during 
the Middle Ages. When the laborer secures his 

1 " Jahrbiicher fur Nationalokonomie," 1864, Vol. II, p. I. 


ireedom, he is regulated by custom and status in 
making his individual contracts. This was the 
condition in the handicraft period. Later, as the 
force of custom wanes, there is at first little inter- 
ference in the making of his contracts, and then 
regulation to an increasing extent by statute, and 
finally, we have collective bargaining regulated 
still more by statute. This transition from the 
individual contract to group contract which is now 
taking place is, like all transitional stages, accom- 
panied with disturbance and pain. Processes of 
readjustment in human relationships always have 
brought suffering, and doubtless always will bring 
suffering, although the suffering may be greatly 
mitigated by a better will and a higher intelli- 

Recently Professor F. H. Giddings^ has pro- 
posed a new classification. He rejects the com- 
mon classification, not that il is untrue, but that it 
is destitute of any real meaning.^ He divides all 
economies into three classes, the Organic, the 
Instinctive, and the Rational. We may pass over 
the first two, as practically all human activity 
falls within the last. The Rational Economy is 
again divided into (i) Ceremonial and (2) Business 
Economies. Within the first there are three phases, 

1 In an article entitled " The Economic Ages," Political Science 
Quarterly, Vol. XVI, p. 193. 

2 The present writer differs emphatically as to the utility of the 
older classification. It furnishes a convenient framework within 
which to arrange our knowledge, and elucidates the progress of 
industrial society. 



— the Luck, the Magic, and the Sacrificial Econo- 
mies, — in which there is a progressive mental devel- 
opment from reliance on mere conjecture, through, 
reasoning by analogy, to logical reasoning in which 
there is no careful examination of the premises - 
The mark of the business economy is inductive 
reasoning, and here again are three phases, a 
Slave, a Trade, and a Capitalistic Economy. This 
way of looking at the matter brings out the psy- 
chological element, and one is certainly compelled 
to admit that industrial evolution means something 
more than a mere improvement in technical pro- 
cesses. It means at the same time changing 
human beings, mentally and morally. 

These various classifications are not only not 
antagonistic, but they are all necessary to a com- 
plete view of industrial evolution. This will be 
made clear by the table on the following page. 

In conclusion, it must be repeated that a table 
of this kind is helpful if used with discretion ; that 
otherwise it is misleading. The transitions from 
one stage to another are slow, and old forms per- 
sist when a new period in industrial evolution has 
made its appearance. The differences between 
the stages are best understood by comparing each 
one when it is fully developed. Between the fully 
developed periods of each stage there is a transi- 
tional growth. The table also gives that which is 
dominant and characteristic in each stage. It has 
already been stated, for example, that money is 
used in the stage of credit economy, but that it 



From the 









From the 




Standpoint * 

I. Hunting and 






■ Woman's 
Labor, and 
of Slavery 



g ■ 


a. Pastoral 


3- Agricultural 

Slavery and 



4. Handicraft 




Free Labor 
governed by 


5. Industrial 
(i) Universal 
as an ideal 

(2) Concentration 

(3) Integration 



Economy) * 


with Increas- 
ing Regula- 
tion by 

Group Con- 
tract and 
by Statute 


1 Probably Professor Giddings would not himself be willing to 
state at just what points in industrial evolution these divisions 
come, and manifestly there is a considerable overlapping. All that 
the present author intends to say is that there is a general corre- 
spondence in the stages as indicated in the table. 

2 Added by the present author. 



is credit which especially characterizes the later 
stage. The significance of this fact is brought out 
by recent discussions on money. Many persons 
who have engaged in the popular discussion of this 
topic seem to have overlooked the fact that we 
have reached a period of credit economy, and that 
what is essential above everything else is that 
credit should rest upon a sound foundation, and 
that, inasmuch as money is but the " small change 
of business," an increase or decrease in the supply 
of money is a small matter as compared with the 
volume of credit. A sound basis of credit must, 
above everything else, be provided, and the money 
question is to be regarded very largely from the view- 
point of its influence upon credit. This is men- 
tioned to illustrate the significance of the stages. 
A word or two further may be said about the 
stages when viewed from the labor standpoint. 
Manual labor goes back to slavery, and throughout 
the world we find development from slavery 
through various half-free forms to a condition of 
freedom. Slavery was an outcome very largely of 
war ; conquered enemies in the early ages were 
enslaved. Preceding slavery we have, as has been 
pointed out, slaughter of enemies. Manual toil 
also was in early ages performed largely by 
woman; consequently, the slaughter of enemies 
and woman's labor are characteristic features of 
the early stage in the development of labor. Man 
toiled also in the manner which has been indicated 
in the present chapter. There are also, in prim- 



itive society, variations in the toil performed by 
men, but it has not been compatible with the pur- 
poses of this book to enter into these variations 
fully. The endeavor is made in this Part I to 
give a broad general survey only of the evolution 
of industrial society. 




We have seen in previous chapters that the 
evolution of society has meant an ever increasing 
differentiation. From another standpoint, this 
means that there is a greater and greater variety 
in the groups of persons having common char- 
acteristics. Race, nationality, ability, education, 
moral qualities, religious beliefs, manners, wealth, 
and occupation, each affords a basis for a different 
classification. But, ordinarily, when we speak of 
classes in society, we have in mind those class 
divisions which affect the social intercourse of 
people, and which give them a higher or lower 
rank. The " Century Dictionary " defines a class 
as " An order or rank of persons ; a number of 
persons having certain characteristics in common, 
as equality in rank, intellectual influence, educa- 
tion, property, occupation, habits of life, etc." In 
the present discussion we are concerned with the 
influence exerted by the economic organization 
and constitution of society^ on the formation of 
class distinctions. It is to these that we refer 
when we speak of economic classes. 

1 The distribution of wealth is included. 


In the earliest stages of society, we have seen, 
the women are the principal workers. Later, slaves 
are forced to labor for the community. Then we 
find the workers becoming free, but at first they 
stand at the bottom of the social scale. Among 
the Greeks and Romans, commerce and industry 
were considered unworthy pursuits for a citizen. 
In the caste system of India the industrial class 
occupies a position only one grade higher than that 
of the servile class. Step by step the wealth-pro- 
ducing members of society have won for themselves 
social recognition, and to-day we in America look 
with growing disfavor upon a man who lives upon an 
inherited income without engaging in some " use- 
ful" occupation. But the workers have them- 
selves become differentiated, and increasingly so 
with the growing complexity of modern business 

It has often been said that we have no classes 
in America. Our federal Constitution says that 
no title of nobility shall be granted either by the 
United States or by any state. The law is sup- 
posed to guarantee every man an equal vote, re- 
gardless of his property, his education, his birth, 
or even his color. Every child, we have been fond 
of saying, has an equal chance of rising to the 
highest position either in the political or the indus- 
trial world. "In the United States," said De 
Tocqueville, writing in 1833, " professions are more 
or less laborious, more or less profitable ; but they 
are never either high or low : every honest calling 



is honorable." To be sure, even in his day there 
were rich and poor, but, he remarks, " the class of 
rich men does not exist ; for these rich individuals 
have no feeling or purposes in common, no mutual 
traditions or mutual hopes ; there are individuals, 
therefore, but no definite class." ^ 

This same writer, however, also gave a warning. 
The extensive subdivision of labor and the result- 
ing large-scale production, he saw, was working a 
change. In this connection he observes: "The 
master and workman have then here no similarity, 
and their differences increase every day. They 
are only connected as two rings at the extremities 
of a long chain. Each of them fills the station 
which is made for him and which he does not 
leave: the one is continually, closely, and neces- 
sarily dependent upon the other, and seems as 
much born to obey as that other is to command. 
What is this but Aristocracy ? " ^ 

Some fifty years later another foreign observer 
wrote : " There are no struggles between privileged 
and unprivileged orders, not even that perpetual 
strife of rich and poor which is the oldest disease 
of civilized states. One must not pronounce 
broadly that there are no classes, for in parts of 
the country social distinctions have begun to grow 
up. But for political purposes classes scarcely 
exist. No one of the questions which now agitate 
the nation is a question between rich and poor. 

1 De Tocqueville, "Democracy in America," Boston, 1873, 
Vol. II, pp. 186 and 196. * /^j^.^ p, ,^^^ 



nnstead of suspicion, jealousy, and arrogance em- 
littering the relations of classes, good feeling and 
Idndliness reign." ^ This was written in 1888, but 
^he author, in a later edition of his book (1894) 
suggests that possibly the view might seem too 
Toseate, although he hesitates to " let matured con- 
clusions be suddenly modified by passing events." 
In recent years we have been hearing much 
about the struggle between the laboring class and 
the capitalist class. There are those who think that 
the words which Karl Marx and Friedrich Engels 
wrote, in the "Communist Manifesto," in 1848, 
find support in the present economic conditions in 
the United States. These writers said : " The 
history of all hitherto existing society is the history 
of class struggles. Freeman and slave, patrician 
and plebeian, lord and serf, guild-master and 
journeyman, in a word, oppressor and oppressed, 
stood in constant opposition to one another, car- 
ried on an uninterrupted, now hidden, now open, 
fight, that each time ended, either in revolutionary 
reconstitution of society at large or in the common 
ruin of the contending classes. In the earlier 
epochs of history we find almost everywhere a 
complicated arrangement of society in various 
orders, a manifold gradation of social rank. In 
ancient Rome we have patricians, knights, plebe- 
ians, slaves; in the Middle Ages feudal lords, 
vassals, guild-masters, journeymen, apprentices, 

* Bryce, " The American Commonwealth," 3d ed., Vol. II, 



serfs; in almost all of these classes, again, 
subordinate gradations. The modern bourgeois 
society that has sprouted from the ruins of feudal 
society has not done away with class antagonisms. 
. . . Society as a whole is more and more split- 
ting up into two great hostile camps, into two 
great classes, directly facing each other, Bour- 
geoisie and Proletariat." 

Within the past year it has been possible for a 
writer to. attract widespread attention by his com- 
parison of our present industrial organization with 
the feudal organization of the Middle Ages.^ Such 
views are greatly exaggerated, but they serve to 
remind us of the ancient philosopher's warning 
that momentous changes may be taking place 
within a society long before there is any apparent 
change in the outward forms of government. The 
characteristics which we have been associating 
with the idea of democratic America may after all 
belong merely to the early days of this country. 
Indeed, class divisions have to-day a greater signifi- 
cance in the older parts of the country than they 
do in the newer. The farther west one goes, the 
more democratic becomes society. The author 
has found there are social' differences even in the 
middle West which would be scorned in most 
places in Colorado. Let us inquire, then, what 
modern industry is doing in the way of erecting 
social barriers. 

One great cleavage that we see in this country 

1 W. J. Ghent : " Our Benevolent Feudalism." 


is the separation of the farming classes from the 
industrial workers proper. We have already seen 
that the early "manufacturers" were at the same 
time farmers, but gradually city life has become 
differentiated from country life. This separation 
has not, however, been of any great significance in 
the formation of social classes. To be sure, those 
living in the city have looked upon themselves as 
a little more cultured than their country cousins, 
but the latter have no feeling of inferiority. We 
certainly cannot speak here of higher and lower 
classes. Such differences between city and coun- 
try as exist may, moreover, be expected to be- 
come somewhat less in the future. The growing 
use of the telephone, the extensive building of 
interurban electric roads, and the improvement in 
the country schools are making the distinction less 

Another broad division is often made by separat- 
ing the employers from the employed. This 
classification has been growing in importance. In 
Washington's administration, let us say, it at least 
would not have been unreasonable for an ordinary 
laboring man to expect to become the manager of 
a business of his own. Nowadays it is absurd to 
hold out to the masses of men such a prospect. 
The few may rise, as the few may draw prizes in a 
lottery, but it is foolish for an ordinary workman 
to look forward to great wealth or to the ownership 
of an independent business. There are, for ex- 
ample, over a million persons engaged in the railway 


business in the United States, but less than one 
per cent of them are officers of any sort, let alone 
being president of the railway. 

Professor Thorstein Veblen, of the University of 
Chicago, has drawn a careful distinction between 
what he calls the industrial and pecuniary classes.^ 
The former class comprises the actual workers in 
the factories, who come in contact chiefly with the 
technical processes of industry, while the latter 
class contains those individuals who are engaged 
in buying and selling, making contracts, etc. The 
pecuniary management, he says, has been passing 
into the hands of a relatively decreasing class, 
whose contact with the industrial classes grows 
continually less immediate. This difference of 
employment is leading to differences in habits of 
thought, and this growing unfamiliarity of the 
working classes with the pecuniary side of business 
may account in some measure, Professor Veblen 
thinks, for their improvidence, their disrespect for 
private property, and the growth of socialism. 
The distinction is interesting, but its significance 
may be exaggerated. 

Again, we may divide the workers according to 
their kind of occupation. We have the bakers, 
the barbers, the blacksmiths, the carpenters, 
the coopers, the glass bottle blowers, the machin- 
ists, etc., etc. The members of such groups as 
these will form associations, develop class sympa- 

^ In an article entitled " Industrial and Pecuniary Emplojrments," 
Publication of the American Economic Association, i9oi,p. 19a 



thies, and work together for their common inter- 
ests, but it cannot be said that these are harmful 
or undesirable class distinctions. They ^ould 
necessarily exist in any society in which each man 
engaged in that occupation for which he possessed 
the greater aptitude. 

So, also, with the stratifications which appear 
within any business itself. The existence of su- 
perintendents, managers, and foremen is indispen- 
sable in a large business. Extensive cooperation 
necessarily means gradations in authority, but 
these in themselves are not an evil, for if we could 
be sure that the higher positions are filled by 
those who are best fitted for them we should have 
merely the recognition of a natural aristocracy of 
merit, which philosophers have always approved. 

One of the chief questions concerning economic 
classes is whether present economic conditions are 
such as actually result in the selection of the best 
for the highest positions. Is there a real equality 
of opportunity for all of the members of society to 
show what they can do ? Vast differences in 
wealth stand in the way of such equality, for, 
though a rich man's son may be at a disadvan- 
tage so far as temptation to idleness is concerned, 
there is simply no comparison between his op- 
portunities and those of a poor man's son. Dif- 
ferences in wealth are, indeed, the most potent 
cause in the formation of social classes, not merely 
because great wealth is a mark of distinction, but 
because of the opportunities it brings of develop- 
G 8i 


ing one's powers, and also because, as great 
wealth persists, habits of life and thought are 
formed which necessarily separate class from class. 
In many a city in the United States there is no in- 
dividual or family with an income of $40,000 a , 
year, but there are circles in the United States in 
which a person can move with difficulty with an 
income of that amount. Perhaps it should not be 
so; but, as a matter of fact, when differences in 
wealth pass a certain point — vague and shifting, 
to be sure, but real — they do operate as a social 
barrier, and prevent the growth of fraternal feel- 
ing. This has been recognized by philosophers 
from time immemorial. 

This brings us to a feature of present economic 
conditions which is doing much to raise up social 
barriers, namely, monopoly power in private hands. 
Looking at the matter in whichever way we please, 
the monopolist is a privileged person, and monopo- 
lists constitute a privileged class, as truly as the 
nobility of old England or Germany ; indeed, the po- 
sition of the ancient nobility is, comparatively speak- 
ing, a small matter.^ Monopoly power is a social 
force which separates men out from one another into 
well-defined classes, and thus lays a basis for danger- 
ous agitation. First, it gives us a privileged class of 
men, receiving higher profits than those with which 

1 The successful monopolist can sometimes buy a title ; frequently 
he can give his daughter a dowry which, with other opportunities, 
will enable her to marry a man with a high and historically distin- 
guished title. 



the unprivileged must be content. In the second 
place, the monopolist promotes the formation of 
classes among consumers, as a result of the action of 
monopoly price. Monopoly price means class price, 
whereas competitive price is uniform, and, if we 
may use such an expression, democratic in its ac- 
tion. Where we have perfect competition work- 
ing, we have one uniform price charged for the 
same article at the same time. But monopoly 
price, free from the restraints of competition, is 
the price which will yield the largest returns. The 
restraint upon an increase of price comes only 
through a diminution of sales. We cannot go 
into this matter at length here, but a little reflec- 
tion will show that this fact must mean class price. 
The price which is most profitable for one class is 
not the price which is most profitable for another 
class in a community. Consequently the monop- 
olist attempts to find some method of dividing 
the community into classes, and asking of each 
class that price which is most profitable. This 
will result in a charge of a high price for those 
who are comparatively weak and feeble, and unable 
to resist imposition. In some cases, also, it will 
operate to establish a high price for the wealthy, 
and a comparatively low price for poorer people. 
There is no manifest unwillingness on the part of 
men to fleece the wealthy whenever they get a 
chance. The poor, even, evince this inclination, 
for it must by no means be supposed that in society 
we have to do simply with good poor men, and bad 



rich men — far from it. The formation of class 
price increases among us with the growth of mo- 
nopoly. One of the best illustrations is offered 
by the large number of kinds of tickets which 
our railways are offering, in order thereby to find 
that price which is most profitable for each class 
in the community. For cities within fifty miles of 
Chicago, along the line of one of our great railway 
systems, the author has counted six different kinds 
of tickets, each ticket representing a class price. 

There is still another way in which monopoly 
leads to the formation of classes, and that is through 
the varying treatment which monopolists accord to 
their customers, otherwise than in the matter of 
price. The general rule is that the strong are 
the favored, as may be seen in the discriminations 
made by the railways in favor of large shippers. 

In conclusion, it must be said that classes in 
modern times have chiefly an economic and not a 
political basis, and that if we take any definition 
which we will as a guide, we must acknowledge 
that we have classes in the United States. We 
have groups of individuals who possess common 
characteristics. They have their own peculiar 
habits of body and of mind, and their own pe- 
culiar needs. The farmer has his way of look- 
ing at things, the merchant another way. The 
wage-earner, especially as he develops, as he is 
doing, class consciousness, has still other ways of 
doing things and viewing affairs. The chief classi- 
fication in our own day is that which is caused, on 



the one hand, by variations in wealth, and on the 
other, by a separation between the employed and 
the employers. All this comes about naturally, as 
the result of the evolution of industrial society. 
We have different psychical worlds, and this is 
brought out very clearly whenever a great strike 
takes place. Those who read with approval the 
great daily newspapers of our time have their 
world of ideas and interests, and this is a differ- 
ent world of ideas and interests from that to which 
those belong who read with approval the so-called 
labor press. If one passes from one class of news- 
papers to the other one finds an entire change of 
viewpoint, and what appears black to the one is 
white to the other. Those whose feelings, sympa- 
thies, and interests are the feelings, sympathies, and 
interests of the employing class, in reading a great 
New York daily, will nod their heads approvingly 
and say, " Yes, that is true." On the other hand, 
those who entertain the views of the working 
classes, and sympathize with them in their strug- 
gles, will read with approval the diametrically oppo- 
site utterances of the labor press. How could 
there be a more clearly cut social cleavage.^ 

The effects of classes are both good and evil. 
They are good because they tend to develop differ- 
ent gifts and capacities, and to produce a rich and 
diversified civilization. They are evil because 
their natural tendency is, as they become sharply 
differentiated, to separate man from his fellows; 
and this is a bad thing. But as we shall see more 



clearly as we proceed in the present book, there 
are forces at work which tend to bring men of dif- 
ferent classes together. The movement is by no 
means all in one direction. The ideal is that of a 
friendly and harmonious cooperation of classes, 
with the free passage from one class to another, in 
accordance with gifts, and the union of all classes 
in one social body. There are forces at work 
among us, and powerful forces, for the accomplish- 
ment of this ideal. It rests with us to see whether 
or not the forces of social union shall triumph over 
the forces of social disintegration. 




As we look back over the course of economic 
evolution, we observe certain general lines of de- 
velopment standing out with especial prominence. 
One of these is the growth and modification of the 
idea of property. In the earliest of the economic 
stages, we have seen, the idea is wanting, not 
merely of private, but also of public property. 
The idea of ownership does not exist. In the pas- 
toral stage, ownership in movable goods is recog- 
nized, and in the agricultural stage, landownership 
makes its appearance. To-day the idea of property 
is so thoroughly ingrained in our habits of thought 
that it must be regarded as one of the fundamental 
facts in our economic life. But it has reached no 
final form. It is continually being modified ; and 
we may note here some of the present tendencies 
along this line. In the first place, there is an in- 
creasing mass of free goods, especially free intel- 
lectual goods. Every year sees an addition to the 
number of great ideas that may be utilized by any 
one who cares to appropriate them. To be sure, 
we grant patents and copyrights, but they are but 
temporary. In a very true sense there exists a 




body of knowledge that is a social heritage handed 
down from one generation to another, constantly 
increasing, and free to all. A second tendency is 
the restriction of the extent of private property, 
and, generally speaking, an extension of public 
property. The world over we notice an increase 
in public property in forest lands. The increase 
in play-grounds for children, in public parks, in 
public libraries, and in the municipal ownership of 
"public utilities," affords other illustrations. In 
the third place, there is a clear development in the 
social side of private property. More and more 
\ the idea that private property is a social trust has 
\nade its way, and it is now recognized that the 
arguments in favor of private property are based 
chiefly upon the benefits which society derives 
therefrom. Again, new forms of property are con- 
tinually appearing. Patents and copyrights are 
comparatively recent in the world's history. Good 
will in business is often bought and sold. Certain 
new rights very much akin to private property are 
also being recognized, such as the right to be pro- 
tected against injury, which seems to be implied 
in the employer's liability acts. We are hearing 
more, also, of the right to work. Finally, we 
notice changes in the mode of acquisition of pri- 
vate property. In earlier times, force played a 
larger part in the acquisition of property, but we 
are coming to insist more and more that it shall 
be won by service. There is a general movement 
to restrict the sources of unearned incomes, such 



as monopoly profits, and the increasing taxation of 
inheritances has some significance in this connec- 

The evolution of forethought is another one of 
these general lines of development that stand out 
conspicuously. We have seen how little of it was 
to be found among the American Indians, and 
probably we can say that the advance of civiliza- 
tion involves a continuous and uninterrupted devel- 
opment in the habit of taking thought for the future. 
The increasing importance which individuals attach 
to the future is at least a partial explanation of the 
fall in the rate of interest. But socially, we Ameri- 
cans, on account of the newness of our economic 
life, show a lack of forethought with reference to 
the use of our resources when we are contrasted 
with older civilizations. A German commissioner 
at the World's Fair in Chicago, when asked for his 
most marked impression of the United States, after 
some hesitation, on being pressed, said this, " You 
are a nation of robbers." He went on to speak 
about the way in which we are squandering ouir^ 
resources and robbing future generations. W^ 
have a certain amount of individual forethought, 
but we have less social forethought. 

But perhaps the one fact in the evolution of soci- 
ety that becomes clearer and clearer as time passes, 
is that cooperation is the great law of social life 
growth. Men learn to act together in increasingly 
large numbers for increasingly numerous purposes. 
Individualism in production, exchange, distribution, 



and even consumption, gradually yields to cooper- 
ation.i Early man produces for himself, and in 
his own group consumes that which has been pro- 
duced and worked up in the household. He goes 
his way with economically little regard to the ac- 
tivities of other households. Every step forward 
in his progress means an increasing number of 
relations with other households, until we come to 
a time when very little which the ordinary indi- 
vidual consumes is produced by him, but reaches 
him as a result of the activities of thousands and 
hundreds of thousands, and even millions of men, 
who are working for him, while he serves them. 
The whole world becomes a vast network, in which 
each serves all and all serve each. 

Another great social law which becomes appar- 
ent in the course of evolution is this: we pass over 
from unconscious social cooperation to conscious 
social cooperation. At first, men act together be- 
cause each one is pursuing his own ends, and they 
are scarcely aware that they are cooperating with 
each other. But this changes with a growth in 
the complexity and magnitude of the industrial 
units of society. Conscious cooperation in indus- 
try is only one part of the developing self -con- 
sciousness of society. Society sets before itself 

1 Among the Iroquois each individual ate by himself, sitting or 
standing, and where most convenient to the person. They also 
separated as to the time of eating, the men coming first, and then 
the women and children by themselves. Morgan, ** Houses and 
House Life of the American Aborigines," contributions to North 
American Ethnology^ Vol. IV, p. 99. 



purposes, and attempts to achieve them through so- 
cial action. As our life becomes social, this method 
for the achievement of our purposes, namely, social 
action, is inevitable. We have in this an explana- 
tion of many modem phenomena which seem 
strange to those who do not have the right clew 
for their explanation. At first, social efforts for 
the attainment of social purposes are necessarily 
crude, and failures are more common than suc- 
cesses. Society, like a child, must learn to walk 
without stumbling. We have our Granger move- 
ments in our attempts to regulate those agencies 
of social cooperation which we call the railways. 
A failure of early movements does not, and can- 
not, lead to an abandonment of social efforts. The 
Granger legislation makes way for state railway 
commissions and the Interstate Commerce Com- 
mission. This represents a higher form of social 
effort, but by no means a final form. These vari- 
ous commissions must receive a much higher devel- 
opment, or make way for something else, possibly 
even public ownership, but this remains to be 

That which is especially characteristic of the 
most modem phase of social evolution is the effort 
to secure harmony and unity of action among great 
industrial establishments, in order to achieve thereby 
the largest results with the least output of energy. 
The avoidance of waste of economic energy is, in 
other words, the great underlying principle of th6^ 
present phase of industrial evolution. In the earlier ^ 



phase of the industrial stage a marvellous order was 
achieved in a single industrial establishment; but 
each establishment went its own way with little 
regard to other industrial establishments. The 
result was disharmony and loss. The critics of 
society found many points of attack in this con- 
tradiction between the harmonious cooperation of 
all the parts of a single establishment, and the 
lack of organized and harmonious working among 
the various establishments. It was this particular 
aspect of production which led the socialists to 
speak of the planlessness of private capitalistic 
production. Planlessness is, indeed, one of the 
great words in the socialist critique, but one heard 
somewhat less frequently since the trust era began. 
Each one, they said, is dependent upon all others 
who are producing for the same market the things 
which he is producing. All manufacturers of shoes 
are dependent upon all other manufacturers of 
shoes, inasmuch as all these others are compet- 
itors. But no one, it was argued, knows what his 
competitors are doing, and each one is therefore 
working in the dark. The result of this unorgan- 
ized production of competitors must therefore be 
overproduction, stagnation, and industrial ruin 
brought about by the economic crisis. This is 
but a rough sketch of the criticism, and takes up 
but a single line. Nowadays, the socialists insist 
more upon bad distribution as the cause of crises. 
Unquestionably, this lack of harmony was a weak- 
ness which intelligent men, desiring progress, must 



endeavor to correct. To secure harmonious action 
among producers and to avoid needless waste, two 
methods have been followed : the first, the method 
of public action ; the second, the method of private 

Railways in Germany and in the United States 
offer an excellent illustration. The waste and dis- 
advantages of planlessness in the railway world 
early became obvious, and in Germany the states 
have undertaken to secure unity, and that chiefly 
through public ownership and operation. The 
various German states have not all moved with 
equal rapidity in this matter. Prussia long tried 
the experiment of a mixed system of public and 
private ownership before, about twenty years ago, 
abandoning that for an almost exclusive system of 
publicly owned and operated railways. The state 
of Wiirtemberg, however, from the beginning had 
a unified and exclusive system of public railways, 
placed under the control of a railway manager of 
exceptional ability. In the United States, clear- 
sighted and long-headed men, powerful person- 
alities like Commodore Vanderbilt, saw, with equal 
clearness, the advantages of unity; and, through 
his own private effort, seconded by able lieuten- 
ants, Vanderbilt began a movement for consolida- 
tion and unification which yielded him one of the 
largest fortunes up to that time known in the his- 
tory of the world. What has taken place in rail- 
ways has taken place in the case of those other 
undertakings which we class together roughly as 



either natural monopolies or public utilities. This 
method of public ownership we may perhaps desig- 
nate as the Teutonic method; and the method of 
private ownership with attempted public control 
over private corporations owning and operating 
" undertakings of the class in question, we may 
designate as the French method or, more properly 
speaking, the Latin method. It is the method 
which characterized this country in the nineteenth 
century, and we might perhaps with equal pro- 
priety call it the nineteenth-century American 
method. Whether or not it will be the twentieth- 
century method is open to doubt. We are Teu- 
tonic rather than French or Latin in our modes of 
thought and action. In the case of local public 
utilities, at any rate, we are rapidly extending 
the system of public ownership in order that we 
may secure the benefits of unified and systematic 
production, although the restriction of monopoly 
profits has been the chief consideration in this 
last case. 

The efforts to secure unity and harmony in the 
relations of manufacturing establishments to one 
another have, however, been almost altogether 
private in this country as well as in other coun- 
tries. The United States leads the world in the 
trust movement, and the most gigantic, perhaps 
one should say colossal, achievement along this 
line is found in the United States Steel Corpora- 
tion. The industrial question which overshadows 
in importance all other questions is this : Is indus- 



trial evolution naturally leading to the domination 
of substantially all the great fields of industry by 
monopoly? In an earlier chapter attention was 
called to the theory of industrial evolution advanced 
by Karl Marx. More than fifty years ago he uttered 
words which to many, even non-socialists, now seem 
like a prophecy. Marx predicted that the business 
units in production would continually increase in 
magnitude, until in each branch of industry 
monopoly would emerge from the struggle of 
interests. When this happened he thought that 
private monopoly would be replaced by public 
monopoly; in other words, that pure social owner- 
ship and operation of all great industries would be 
substituted for private ownership and operation, 
and thus would dawn the era of socialism. Here 
are the impressive words in which a generation 
ago he expressed this thought : — 

"With the continually decreasing number of the 
magnates of capitalism, who usurp and monopolize 
all the advantages of the changed form of produc- 
tion, there is an accompanying increase in the mass 
of misery, of oppression, of bondage, of degrada- 
tion, of exploitation ; but there also arises a revolt 
of an increasing class of laborers, who have been 
schooled, united, and disciplined by the mechanism 
of the capitalistic processes of production. The 
monopoly of capital becomes a shackle to the 
method of production, under and with which it 
has grown up. The concentration of the means 
of production and the association of laborers 


reach a point where they are incompatible with 
their capitalistic shell. The shell is broken. The 
death knell of capitalistic private property sounds. 
The expropriateurs are expropriated."^ The ad- 
vocates of the trust frequently use arguments pre- 
cisely like these of the socialists in pointing out 
the benefits of trust production, and maintain that 
the advantages of system and unity are so vast 
that in the end the trust method will dominate 
every great industrial field. 

A discussion of the various aspects of this ques- 
tion brings before us, as subordinate questions, 
nearly all the pressing economic problems of our 
day. It is hard to see how we can have any clear 
opinions in regard to public policy, until we have 
satisfied ourselves in regard to the question whether 
or not there are natural laws in the industrial world 
governing industrial evolution, and bringing about 
inevitably a reign of monopoly, either private or 

In considering this question, we must first of all 
sharply distinguish between large-scale production 
and monopolistic production. This is something 
which the author has been iterating, and reiterat- 
ing, for the past fifteen years, or more. Many 
others have also been saying the same thing, and 
it seems now to be generally understood. It is, 
indeed, strange that it should ever have been diffi- 
cult to understand the difference between vast pro- 

I "Das Kapital," 2te Aufl., S. 793. Quoted in Ely's "French 
and German Socialism," pp. 177-178. 



duction and monopolistic production.. One of our 
great retail stores, like Marshall Field's, or Man- 
del Brothers', in Chicago, or Wanamaker's, in 
Philadelphia or New York City, represents very- 
large scale production, but along with this large 
scale production there is the sharpest kind of 

Competition is the foundation of our present 
social order. Our legal system rests upon compe- 
tition as a basis. The great legal decisions in 
England and America assume, either implicitly or 
explicitly, that competition is a pillar of the social 
order. Competition, along with large scale pro- 
duction, brings its own problems, but they are easy 
of solution as compared with the problems of mo- 
nopoly, because competition is compatible with 
private property in capital, and with private pro- 
duction. Where competition exists, the problem is 
its regulation in such a manner as to secure its 
benefits, and to remove, where it is possible, and 
where it is not possible, to mitigate, its evils. What 
is needed for competition, especially, is to raise its 
moral and ethical level. 

But we find among us widespread monopoly as 
a result of industrial evolution, and this has brought 
evils of another sort, which will be discussed in a 
later chapter.* 

There seems to be something inevitable in all 
these general tendencies that we have been sketch- 
ing. When we have said all that we can about the 

1 See infra, Pt. II, Ch. IV. 
H 97 


power of the individual will, we still find that there 
are great social forces which compel us to act 
along certain lines. The steady growth of popu- 
lation brings with it new problems, more complex 
social relations, and we are forced to adjust our- 
selves accordingly. The momentous changes re- 
sulting from the industrial revolution have come 
about without the anticipation or express will of 
society; we could not turn back now to former 
conditions if we would ; all that we can do is to 
attempt to control and take advantage of these new 
forces. The most general statement of our indus- 
trial problem is this: How shall we retain the 
advantages of* associated effort with freedom of 
movement and a socially desirable distribution of 
products ? This is a task which demands all our 
best powers and our best purposes, with a willing- 
ness to sacrifice private ease and comfort for the 
public good. 

Reference has been made to the growing co- 
operation among men. This means at the same 
time increasing dependence of man upon man, 
but this increasing dependence is not burdensome, 
provided it is mutual. If it is one-sided depend- 
ence, it may become virtually slavery under the 
name of freedom. Dependence must mean inter- 
dependence. The multiplying relations of men 
with one another give us a new economic world. 
These relations require regulation, in order to 
preserve freedom. The regulation by the power 
of the state of these industrial and other social 



relations existing among men is an essential con- 
dition of freedom. Herbert Spencer, looking at 
the political regulation of economic relations, 
speaks of a coming slavery,^ but he overlooks the 
fact that with the increasing dependence of man 
upon man in modern society, this dependence be- 
comes one-sided, and results in slavery if these 
relations are not regulated. This is the explanation 
of the fact that every civilized nation in the world 
finds it necessary to regulate to an increasing 
extent the industrial relations existing among men. 
Free contract alone, that is to say, unregulated, 
can only result in a degrading dependence of some 
men upon others, and consequently social degrada- 
tion. On the other hand, through regulated asso- 
ciation come freedom and individuality. 

* Spencer's article, "The Coming Slavery," and three other 
articles similar in character have been reprinted under the title, 
"The Man versus The State." This forms an appendix to the 
abridged and revised edition of " Social Statics," New York, 1897. 




In the foregoing chapters we have been discuss- 
ing economic development in general terms. It 
will be of help to consider also some statistical 
evidence of the industrial progress in the United 

We have seen how industrial evolution has meant 
a steady increase in population. Herein American 
experience but repeats the world's experience. 

From 1790 to 1900 our numbers have increased 
over nineteen fold, although in the last half-century 
the rate of increase has been declining. The 
density of population, that is, the number of in- 
habitants per square mile, has also steadily increased, 
except in the two decades i8cx)-i8io and 1840- 
1850, when large additions were made to our 
territory. But the figures for the density in each 
geographical division are more instructive. They 
show very clearly the gradual westward movement 
of the population. The following table shows the 
remarkable growth in population with respect to 
numbers and density : ^ — 

1 Twelfth Census, " Population," Pt. I, pp. xx, xxxiii, and Ixxxiii. 


Ukfted States and Tk 



Ceograpmscal DmsioN 


Toul PopuUtion 
(Exclkiding Hawaii, 
Alflslca^ Indiao Ter- 
ritoTy^ Indian K«er- 









TaUQUEt etc.) 







































































































The North Central states have about the same 
density now that the North Atlantic had in 1830, 
and the latter had a greater density in 1790 than 
the Western states have now. The movement of 
the population from the country to the city is 
shown in the column giving the percentage of 
urban to total population. At the present time 
33.1 per cent of the people of the United States 
live in cities of 8cxx) inhabitants or more. 

But an increase in population is not in itself a 
desirable thing unless it also means an increase 
in the well-being of the individuals. Were the 

* In cities of 8000 or more. ^ Corrected population. 



seventy-five millions of 1900 better off than the five 
millions of 1800 ? So far as material resources are 
concerned there can be no question about an aflBrm- 
ative answer. Notwithstanding the fact that the 
population has increased in geometrical ratio, hav- 
ing, roughly speaking, doubled every twenty-five 
years, our command over material goods has 
increased at a still greater rate. We do not have 
trustworthy statistics in regard to the total increase 
in wealth, measured in terms of money value ; and 
if we did, this would not be an accurate index 
of the growth in well-being, for, leaving out of 
account questions of distribution and the changing 
value of money, we must remember that a large 
increase in the supply of goods may mean a 
decrease in total value through a lowering of price, 
but it must mean an increase in total utility. For 
example, the cotton crop in 1898 of ii,i89,ocx) 
bales had a smaller value than the 9,143,000 bales 
of the next year. The increasing money value 
of land in cities means a growth of population, but 
does it always indicate a corresponding increase 
in well-being ? If the canals of the United States 
should be transformed into natural waterways, our 
well-being would be the same or greater, but the 
money estimate of wealth would be less. But tak- 
ing the statistics as we find them, they do show an 
increase in per capita wealth. While too unreliable 
to serve as a basis for accurate comparisons, they 
may be quoted as a partial confirmation of our 
general impressions. 


Growth of Wealth in the United States i 



Per Capita 

1850 .... 
i860 .... 
1870 .... 
1880 ... . 
1890 .... 






Somewhat more reliable evidence in this connec- 
tion is afforded by the total production of cereals. 
There has been a very great increase in the per 
capita number of bushels, notwithstanding the fact 
that the proportion of the population engaged in 
agriculture has declined, leaving more people to 
devote themselves to satisfying other wants of 
society than those for food. 

Production of Cereals in Bushels 



Per Capita 

1849 . 






1869 . 












1 Eleventh Census, 1890, " Wealth, Debt and Taxation," R. II, 
p. 14. The census figures for 1900 are not yet printed, but Colonel 
Carroll D. Wright, in an article in the Independent for May i, 1902, 
makes an estimate for 1900 of ^94,000,000,000, which would give 
a per capita wealth of $1,244. 

« Census of 1900, "Agriculture," Pt. II, p. 16. 


The following table will show the decline in 
the proportion of people engaged in agriculture, 
and the corresponding increase in other lines of 
work : * — 










Professional Service 




Domestic and Personal Service 




Trade and Transportation . 




Manufactures and Mechanical Ind. 




Total .... 




In 1880 the proportion engaged in agriculture was 
considerably greater than the proportion engaged 
in the last two groups of occupations, but in 1900 
the reverse was true. 

That we have become to an increasing extent a 
manufacturing nation is of course a commonplace. 
The following general table from the Census of 
1900 tells a clear story, although the reader is 
warned against using the figures for other purposes 
than to show a general progress. It would lead to 
error, for example, to compare the per capita value 
of products here given with average wages, since 
the value of products is a gross value, containing 
many reduplications. 

1 Twelfth Census, " Population," Pt. II, p. cxxxiii. 

Comparative Summary, 1850-1890I 




ments .... 


Total Wages . . . 

Cost of Materials 

Value of Products, 
including custom 
work and repairing 











Number of Establish- 
ments .... 


Total Wages . . . 

Cost of Materials . 

Value of Products, 
including custom 
work and repairing 













The value of products increased about thirteen 
times from 1850 to 1900, but in the same period 
the population increased only from three to four 

It is of interest to compare the relative impor- 
tance of the great groups of industries contributing 
to this total product Food and kindred products, 
iron and steel and their products, textiles, and 
lumber and its remanufactures constitute one-half 
the total product : — 

» Twelfth Census, " Manufactures," Pt. I, p. xlvii. 


Groups of Industries i 

Number of 


Value of 

Food and kindred products . 


Iron and steel and their products 
Lumber and its remanufactures . 
Leather and its finished products 
Paper and printing .... 
Liquors and beverages 
Chemicals and allied products 
Qay, glass, and stone products 
Metals and metal products other 
than iron and steel 


Vehicles for land transportation . 


Miscellaneous industries . 

Hand trades 

















All Industries . ... 



The use of steam is one of the things that has 
made possible this great industrial development. 
The extent to which water power has been replaced 
by steam and other power is shown in the follow- 
ing table : — 

Per Cent that Steam, Water, and Other Power is of the 
Total Horse-power in the United States^ 




Other Power 


• • • • • 







• • • • • 








1 Twelfth Census, " Manufactures," R. I, p. IxvL 
* Ibid,^ p. cccxxxviiL 



In the census of 1900 statistics were gathered 
concerning industrial combinations, but the follow- 
ing paragraph from the report of the Industrial 
Commission will give a better idea of the extent 
of the trust movement than any figures we can 
give: — 

" The census figures do not permit a comparison 
of the proportion of any particular industry which 
is controlled by industrial combinations, and there- 
fore give no clew to the extent to which such com- 
binations are able to monopolize any industry. In 
many of the most important lines of industry com- 
binations have secured control of a large percent- 
age of the country's production. In many articles 
of steel a single combination controls 75 to 80 per 
cent of the output, and in some lines even more; 
in sugar, about 90 per cent ; in petroleum, at least 
82 per cent. In other industries, although the per- 
centage of the entire output controlled by com- 
binations is not so large, still there are organizations 
with very large capital. In the raising or distribu- 
tion of agricultural products, such combinations, 
though not unknown — e,g. the United Fruit Com- 
pany — are still rare. While a beginning has been 
made toward the combination of mercantile in- 
dustries, not merely in department stores, but also 
in the union of several large establishments along 
similar lines, such as the combination organized by 
H. B. Claflin, yet by far the largest proportion of 
our mercantile business is still owned and managed 
by relatively small concerns. Many manufacturing 


industries, such as clothing, dressmaking, millinery, 
small tools, electrical specialties, house-furnishing 
materials, the textiles, and numerous other articles 
are substantially free from large combinations. 
The manufacture of cotton is perhaps the most 
important in which no combination of large size 
exists." 1 ^ 

In spite of the fact that we have been becoming 
an industrial nation, the leading items of our ex- 
ports are still agricultural products, as is shown by 
the following table : — 

The Ten Leading Articles of Export in the Year 
ENDING June i, 1901 ^ 

Pbr Cbnt 
or Total 


1. Cotton, unmanufactured .... 

2. Breadstuff 

3. Provisions, comprising meats and dairy products 

4. Iron and steel, and manufactures of 

5. Mineral oils 

6. Wood, and manufactures of 

7. Animals .... 

8. Copper, and manufactures of 

9. Tobacco, and manufactures of 
10. Leather, and manufactures of 



1 Report of the Industrial Commission. Vol. XIX, p. 604. 

2 Annual Report of Treasury Department on Foreign Commerce 
and Navigation of the United States for year ending June 1, 190I9 
Vol. I, p. 164. 



Cotton, breadstuffs, and provisions still make up 
over one-half of our exports. It will be of interest 
to compare with the foregoing a list of the — 

Ten Leading Articles of Import in the Year ending 
June i, 1901 1 

Pbr Cbmt 
OF Total 

1. Sugar 

2. Coffee 

3. Chemicals, drugs, and dyes . 

4. Hides and skins .... 

5. Cotton, manufactures of 

6. Fibre, vegetable, etc., manufactures of 

7. Silk, unmanufactured . 

8. India rubber and gutta percha, crude , 

9. Silk, manufactures of . 
10. Fibres, vegetables, etc., unmanufactured 


These ten articles amounted to 53 per cent of the 
total imports in the year 1901. The imports of the 
United States are chiefly food and raw products, 
but manufactured articles are still a large although 
a declining part of them. In 1890, luxuries, manu- 
factures ready for consumption, and manufactured 
articles for use as materials in mechanic arts con- 
stituted 44 per cent of the total imports, but in 
1 90 1 only 40 per cent.^ 

^ Annual Report of Treasury Department on Foreign Commerce 
and Navigation of the United States for year ending June i, 1901, 
VoL I, p. 100. 

•See Report of Industrial Commission,' VoL XIX, pp. 556-558. 


The following table shows the growth in our 
commerce since 1790: — 

Commerce of 1901 compared with Average of Decennial 
Periods, i 790-1 900 1 

Annual Average of Tbn-ybar 


OF — 

Tbn-ybar Periods 



1790-1800 .... 



1801-1810 . 



1811-1820 . 



1821-1830 . 



1831-1840 . 



1841-1850 . 



1851-1860 . 



1861-1870 . 



1871-1880 . 



1881-1890 . 



1891-1900 . 



1 90 1 (Fiscal Year) 



We see here a remarkable growth in the excess 
of exports over imports. It is not clear just how 
the international account is being balanced. For- 
eign nations cannot, of course, make good the 
balance by continued shipments in gold. It doubt- 
less is true that, to some extent, we are becoming 
a creditor nation, or at any rate, ceasing to be a. 
debtor nation. 

1 Annual Report of Treasury Department on Foreign Commerce 
and Navigation, 1901, Vol. I, p. I9' ' 


One of the clearest evidences of the internal 
growth of industry that statistics offer is in the 
increase every decade in the number of miles of 
railways in operation : ^ — 





1830 . 


1880 :. . 




1890 . 




1900 . 


i860 . . . 


I90I . 




In thinking of the benefits which the develop- 
ment of a great transportation system has brought, 
we should not forget at what a cost of human life 
it is being operated. The following is the record 
for the last five years : — 

Railroad Accidents in the United States ^ 



Other Persons 
























































* Taken from Poore's " Manual of Railroads," 1902, p. v. 

* Report of the Interstate Commerce Commission, <* Statistics 
of Raflroads," 1901, p. 97. 


Just to what extent the increased production of 
wealth has been shared in by all classes, statistics 
do not tell us very clearly. There is good reason 
to believe that, absolutely, wages have been rising, 
even though the worker may possibly not have 
been getting his full share of increased production. 
Prices have been steadily falling, and yet money 
wages have on the whole risen. The following 
table will be of interest in this connection : — 

Movement of Average Daily Wages ^ in Gold in certain 
• Cities of the United States (representing 255 Quota- 
tions) AND OF Prices 2 in Gold 



Price Index 



Price Index 

1870 . . 



1884 . . 



1871 . . 






1872 . . 






1873 . . 


1 14.5 




1874 . . 


1 16.6 




1875 . . 






1876 . . 






1877 . . 






1878 . . 





1879 . . 





1880 . . 





1881 . . 





1882 . . 





1883 . . 





1 Bulletin Department of Labor, 1898, p. 668. 
^ Aldrich Report, " Wholesale Prices, Wages, and Transporta— 
tion," Washington, 1893, Pt. I, p. 100. The Aldrich Report received 



Later investigations give the following results 
for the years succeeding 1890 : — 



Wagks 1 



1 12.9 

189I . 



1892 . 


1 06. 1 

3893 . 



a894 . . 



:i895 • • 



3896 . 



1897 • 



1898 • 



1899 . 



1900 . 


1 10.5 

1901 . 



The first column includes data pertaining to 148 
establishments, representing 26 industries and 192 
occupations. The year 1 891 is taken as a base for 
wages with which to compare the other years. 

The second column is the summary of the rela- 
tive prices of 261 commodities, the average price 
for 1 890- 1 899 being taken as the base. 

Whatever increase in wages there has been, it 
should be partly attributed to the efforts of trade 

learching criticism from Professor Charles J. Bullock in his paper, 
** G>ntributions to the History of Wage Statistics," which appeared 
in the quarterly publications of the American Statistical Associa- 
tion, March, 1899, Vol. VI. 

^ Bulletin Department of Labor, 1900, p. 914. 

* Ibid^ March, 1902, p. 235. 

I 113 


unions. Workers have had to fight for the increase. 
From the following figures we see that, in twenty- 
one years, the strikes in slightly over a half the 
establishments succeeded, in about a third they 
failed, and in the rest succeeded partly:^ — 

Per Cent of Estabushmbnts in which Strikes 






1882 ...... 















































Total .... 




1 Sixteenth Annual Report of the Commissioner of Labor, 1901^ 
P- 35. 



Somewhat less favorable results are shown when 
the percentage which the successful strikers con- 
stitute of the whole number of persons engaged is 

Another way in which the working classes are 
being benefited is in the efforts that have been 
made to restrict child labor in factories. It is 
instructive to compare the movement in the vari- 
ous geographical divisions. In the cotton manu- 
facture, for example, there is a marked decline in 
all sections except in the Southern states : — 

The Cotton Manufacture ^ 

Percentage of Wage-earners who are Children under i6 years of age, 

Gbographical Divisions 





New England states . . . 

Middle states 

Southern states .... 
Western states 









United States 





A decline in the death-rate is a reliable indica- 
tion of better conditions of living. Improvements 
in the water supply and sanitary regulations of 
many kinds make for well-being in ways that do 
not admit of money measurement. That progress 
has recently been made in this direction is evident 
from the following figures, showing the death-rate 
in 1880 and 1890 in certain cities : — 

^ Census of 1900, ** Manufactures," Pt. I, p. cxxviiL 






Albany, N.Y 



Auburn, N.Y. . 



Boston, Mass. 



Brockton, Mass. 



Brooklyn, N.Y. . 



Buffalo, N.Y. . 



Chelsea, Mass. . 



Cincinnati, Ohio . 



Cleveland, Ohio . 

1 7.1 


Hartford, Conn. . 



Jersey City, N.J. . 



Lawrence, Mass. 



Lowell, Mass. 



Newark, N.J. . 



New Haven, Conn. 



New York, N.Y. 



North Adams, Mass. . 



Rochester, N.Y. 



Schenectady, N.Y. 



Taunton, Mass. . 



Washington, D.C. 



Yonkers, N.Y. . 



It is instructive to compare the changes in the 
death-rate at different age periods. The chiel 
reduction of the death-rate has been in the ear- 
lier ages, and this means that a larger proportion 
of those born survive to the non-dependent 01 
useful ages.^ The following table shows that 

1 Twelfth Census, " Vital Statistics," Pt. I, p. Ixi. 

2 Newsholme, " Vital Statistics/* 3d ed., London, 1899, P- 304* 



the expectation of life at these ages has in- 
creased:^ — 

England and Walbs 




Average lifetime 
between i6and 
65 years of age 





While this table is for England and Wales,- the 
decline in the death-rate would indicate similar re- 
sults in the United States. Furthermore, it is to 
be observed that in sanitary measures and in what 
is called " public medicine,*' we have as yet scarcely 
made more than a beginning. We have reason to 
anticipate further progress and an increasing pro- 
portion of population in years of full vigor, the 
birth-rate declining somewhat, but a larger relative 
number surviving. This would seem to confirm the 
position that in the modern nation we have an in- 
creasing average of vigor and economic efficiency. 


Industrial history is a large subject on which a 
great deal has been written in recent years. The 
following references are to those more important 
works which are at the same time accessible with- 
out gfreat difficulty. They should be in every public 

1 Newsholme, "Vital Statistics," 3d ed., London, 1899, p. 309. 


library of any importance. The references in the 
foot-notes will be helpful to those who wish to 
make a special study of the subject. 

Ashley, W. J., An Introduction to English Economic His- 
tory and Theory. 2 vols. London and New York, 1888 
and 1892. This is a scholarly work which traces the 
industrial evolution from the manor and the village com- 
munity in the eleventh century to the close of the Middle 

Surveys Historic and Economic. London and New 
York, 1900. This work is valuable to the scholar on ac- 
count of its reviews of works within the field of economic 

Bruce, P. H., Economic History of Virginia in the Seven- 
teenth Century. 2 vols. New York, 1896. 

BtJCHER, Carl, Industrial Evolution, translated from the Ger- 
man by S. Morley Wickett. New York, 1901. The 
author is Professor of Political Economy, University of 
Leipzig, and bases his popularly written, but scientific, 
work upon a wide survey of sources, particularly those 
which relate to primitive economic conditions. He has 
made additions to our knowledge, but exaggerates the 
difference between himself and earlier students of indus- 
trial history. 

Cheyney, Edward P., An Introduction to the Industrial and 
Social History of England. New York, 1901. One of 
the best text-books on the subject. 

Cunningham, William, Growth of English Industry and 
Commerce. 2 vols. New York, 1890 and 1892. A 
work for scholars rather than the general reader. 

Cunningham, William, and McArthur, Ellen A., Out- 
lines of English Economic and Industrial History. New 
York, 1898. This is written with fulness of knowledge, 
and is a brief but excellent text-book. 

HOBSON, John A., The Evolution of Modern Capitalism. 
New York, 1895. This work, which is scholarly, not- 


withstanding a few minor errors, is perhaps the most 
interesting of all the works on industrial history. It 
takes hold of the problems of our time in a more vital 
way than any of the other books. It is to be hoped that 
it will be revised and brought down to date, so as to give 
an account of the most recent developments. 

Morgan, Lewis H., Ancient Society. New York, 1878. 
This work may be called a classic. It traces the evolu- 
tion of society from savagery through barbarism to civili- 
zation. Since it was written a great deal of work has 
been done in this field, but Morgan still holds a high 
rank. A work for the scholar. 

Rand, Benjamin, Selections illustrating Economic History 
since the Seven Years' War. Cambridge, 1892. This 
work contains reprints of the writings of others describing 
the most Ihnportant events in economic history since 1763, 
and also includes transcripts of sections of the English 
and American Navigation Acts. It is valuable because it 
gives information, not easily accessible elsewhere, con- 
cerning the important events of this period. 

TOYNBEE, Arnold, Industrial Revolution. London, 1884. 
A fragmentary but stimulating work. 

Weeden, W. B., Economic and Social History of New Eng- 
land. 2 vols. Boston and New York, 1891. 

Wells, David A., Recent Economic Changes. New York, 

Wright, Carroll D., Industrial Evolution of the United 
States. New York, 1902. 






competition: its nature, its permanency, and 
ITS beneficence 

A STRANGE contrast is aflforded by the various 
utterances of popular economic literature touching 
the subject of competition. The following quota- 
tion furnishes us with a forceful expression of 
opinion adverse to competition, and may be taken 
as typical of views held by a class of sincere, 
enthusiastic champions of social reform: — > 

" Competition is not law, but lawlessness. Car- 
ried to its logical outcome it is anarchy or the 
absence of law. Man is a moral, spiritual, and 
social being, not dominated by animal law. There 
can be no such thing as a harmonized society with 
any competitive elements in it, and Christianity is 
impossible. Every man owes the world his life, 
and must live to have a life to give. In competi- 
tive conditions, not character, but cunning, survives. 
The gospel of success is the great insanity of 
modem materialism, absorbing the best brain, 
thought, and life of the race ; we have been feeding 



our children to this great Moloch of success, but 
as a result we have been warping the intellect and 
making moral idiots. 

" We are commg to a higher evolution, in which 
the lalv of mutual service shall be the law of life. 
Any attempt to build society on a competitive 
foundation is fundamentally anarchical. The idea 
of brotherhood has come to stay, and will not back 
down at the bidding of politicians, monopolists, or 
theologians. The years behind us are but a get- 
ting together of human material in a divine effort of 
perfected humanity. Democracy must be applied 
to reorganizing the machinery of the world." ^ 

Now let us put over against this utterance a 
clear-cut expression of opinion as favorable to 
competition as the words we have just used are 
unfavorable to this manifestation of social force 
in our economic life : — 

" Competition was the gigantic motor that 
caused nearly everybody during the first nineteen 
centuries of Christian civilization to use all his 
mental and physical powers to get ahead. The 
best efforts of humanity, stimulated by competi- 
tion . . . have lifted our race to a standard 
where the mode of living of common laborers is 
more comfortable and desirable than the everyday 
existence of the kings of whom Homer sings.*' ^ 

1 Cleveland Citizen, March 14, 1896. Attributed to George D. 

2 Richard Michaelis in " Looking Further Forward," pp. v and 



Once again listen to this vigorous outburst in 
denunciation of competition, written some fifty 
years ago by a distinguished leader of Christian 
socialism in England : " Sweet competition ! 
Heavenly maid ! . . . Nowadays hymned alike 
by penny-a-lmers and philosophers as the ground 
of all society, . . . the only real preserver of the 
earth ! Why not of Heaven, too ? Perhaps there 
is competition among the angels, and Gabriel and 
Raphael have won their rank by doing the maxi- 
mum of worship on the minimum of grace. We 
shall know some day. In the meanwhile, 'these 
are thy works, thou parent of all good!' Man 
eating man, man eaten by man, in every variety 
of degree and method! Why does not some 
enthusiastic political economist write an epic on 
*The Consecration of Cannibalism*?"^ 

On the other hand, listen to these words by a 
sturdy American, whose courage in denuncia- 
tion of wrong in high places no one can rightly 
impugn : — 

"The competition of economics is not the so- 
called competition of our great centres, where men 
strive to drive men to the wall, but the competition 
which leaves each in full possession of that produc- 
tive power which best unites his labor with the 
labor of others. Competition is no more trespass 
than it is theft It is the reconciliation of men in 
those productive processes which issue in the larg- 

* Charles Kingsley, in " Cheap Qothes and Nasty," printed with 
Alton Locke, Vol. I, pp. 82-83. 



est aggregate of wealth. It is not crowding men 
off their feet, but a means of planting them upon 
their feet." ^ 

These quotations could be multiplied indefinitely 
on the one side and on the other. We find it as- 
serted on the one hand that competition is sinful 
warfare ; that it is " division, disimion, every man 
for himself, every man against his brother";^ on 
the other hand that it is mutual service ; that it is 
altruism of a superior quality ; that it is the essence 
of the golden rule ; that it is loving our neighbor 
as ourselves — in other words, that a correct ren- 
dering of Christian love is competition.^ 

Apparently such contradictory views admit of 
no reconciliation. But when we think seriously 
about the matter, we are forced to ask ourselves 
the question : How is it possible that men of un- 
doubted capacity, of unquestioned sincerity, of 
warm enthusiasm for humanity, can hold views re- 
specting competition, this great corner-stone of our 
economic order, so diametrically opposed that what 
the one cordially hates the other ardently admires 
as a source of abundance for all the deserving 
children of men? May it not be that, after all, 
these disputants are talking about somewhat dif- 
ferent things, and that what is needed, first of all, 
is definition ? 

^ John Bascom, on the " Moral Discipline of Business," The 
Kingdom, Minneapolis, May, 1896. * Kingsley, loc. cit, p. 104. 

* Edward Atkinson, on " Cooperative Competition," The New 
World, September, 1895. 



What, precisely, do we have in mind when we 
discuss competition? Competition, in a large sense, 
means a struggle of conflicting interests. If we 
open our dictionaries and read the definitions there 
given, we shall find something like this in each one 
of them, "The act of seeking or endeavoring to 
gain what another is endeavoring to gain at the 
same time; common contest, or striving for the 
same object ; strife for superiority ; rivalry ** (" Cen- 
tury Dictionary "). 

Professor Gide uses these words to tell us what 
he understands by competition in this large sense, 
" When each individual in a country is at liberty to 
take the action he considers the most advanta- 
geous for himself, whether as regards the choice 
of an employment or the disposal of his goods, 
we are living under the regime of competi- 
tion." 1 

But we do not have enough precision in these 
definitions to answer our purposes. Economic 
competition, it is true, is a struggle of conflicting 
interests for valuable things, for what we call, in 
its widest sense, wealth. But is all struggle for 
wealth competition ? If I knock you down with a 
sand-bag and rob you, is that to be called competi- 
tion ? If I fit out an armed ship and prey upon 
the commerce of the world, is that competition ? 
If I cheat you by a lie, are the lie and the fraud 
part of the competitive process f The reply comes 

* •* Principles of Political Economy," by Charles Gide, translated 
by £. P. Jacobsen, 1892, p. 64. 



naturally, " No, you are now talking about crim- 
inal and wrong action/' 

But if it is not every struggle of conflicting in- 
terests that is to be denominated competition, we 
see at once that competition is a struggle which 
has its metes and bounds. I think we must say 
that the competitive struggle is limited by con- 
stitutional and statute law. It is a struggle whose 
boundaries are fixed by the social order within the 
framework of which we live and move and exercise 
our faculties in the pursuit of a livelihood. When 
we bear this qualification in mind, simple and ob- 
vious as it is, many difficulties begin to vanish like 
fog before the rising sun. Many a man, when 
competition is mentioned, thinks of wild beasts, 
tearing and rending each other in a death struggle 
for an insufficient supply of food. But such is 
only an incomplete and imperfect picture of the 
struggle for life, even among the brutes, and does 
not at all describe the struggle of competition 
among civilized men. 

But even when we call to mind the limitations 
placed upon the struggle of conflicting economic 
interests by the social order, we do not yet have a 
sufficient idea of economic competition. It is 
essential that we add another element to our idea, 
in order to render it more nearly conformable to 
reality. We must bring to mind the great princi- 
ple of evolution which is present wherever there is 
life. Nothing could well be more unscientific in the 
present age of science than to leave evolution out 



of account in our examination of anything so fun- 
damental in society as competition. What light, 
then, does the principle of evolution throw upon 
competition ? 

The struggle for existence among the lower ani- 
mals has become a commonplace of modern scien- 
tific thought, and equally familiar are the selective 
processes of nature, resulting in the survival of 
those fittest for their environment at a particular 
time and place. Not quite so familiar to all are 
other aspects of nature's methods. After the ap- 
pearance of Darwin's epoch-making book, "The 
Origin of Species," biologists first brought out the 
hard and cruel side of the struggle for existence. 
Rousseau's pictures of mild and beneficent nature 
were replaced in their descriptions by the con- 
ception of nature as " red in tooth and claw with 
ravin." Even Huxley spoke of the animal world 
as on about the same level as a gladiator's show. 
" The creatures," said he, " are fairly well treated 
and set to fight ; whereby the strongest, the swift- 
est, the cunningest, live to fight another day. The 
spectator has no need to turn his thumb down, as 
no quarter is given." * 

Huxley in the words just quoted, is discussing 
the cruelty with which nature treats the lower ani- 
mals. When he came to discuss the relation of 
man to nature, he found the process of external 
physical nature equally — or even more — cruel, and 

*"The Struggle for Existence," Nineteenth Century, FehtMaLry, 
K 129 


saw the only method of escape in the introduction 
of a human principle opposed to natur6. This 
nature-process he speaks of as cosmic, and in his 
opinion this cosmic process is greatest in the most 
rudimentary stages and declines as civilization ad- 
vances. "Social Progress/* he says, "means a 
checking of the cosmic process at every step, and 
the substitution for it of another, which may be 
called the ethical process ; the end of which is not 
the survival of those- who may happen to be the 
fittest, in respect to the whole of the conditions 
which exist, but of those who are ethically the 
best." 1 

Later biological researches have seemed to make 
nature's competitive process still more cruel. Her- 
bert Spencer has long been the most prominent 
leader among those who have followed Lamarck 
in the doctrine that acquired qualities can be trans- 
mitted. This doctrine Spencer has developed in 
its social aspects. It is a cheerful, optimistic doc- 
trine for the human race. It means that the im- 
provements which men acquire by their various 
physical and mental educational processes, accu- 
mulated in their own persons, can be transmitted 
to their offspring, and so to successive generations, 
and continuo'us improvement may take place in the 
qualities of those who are born. We have, or at 
any rate we may have, according to this doctrine, 
an increasing stock of qualities acquired and trans- 

1 Vide Huxley's ** Evolution and Ethics," the Romanes Lecture 
of 1893, P- 33- 



mitted. Professor August Weismann has, how- 
ever, in recent years been a leader among those 
who have disputed this doctrine, maintaining that 
the qualities which are acquired during lifetime are 
not transmitted to offspring, and, consequently, 
that the efforts of parents to improve themselves 
do not benefit their children by means of physical 
heredity. To use one of a thousand illustrations, 
all the efforts of a parent to improve himself mu- 
sically do not make it one whit the easier for the child 
to become a musician. This doctrine is held to, in 
the main, still by biologists, although we have now 
a school of Neo-Lamarckians, who think that, 
within certain limits, acquired characteristics and 
qualities can be transmitted to offspring by physi- 
cal heredity. Weismannism means that it is only 
by a weeding-out process, through selection, that 
physical improvement is to take place. The ap- 
parent cruelty of this selective weeding-out pro- 
cess has found frequent expression. Professor 
Lester F. Ward says that if Weismannism is true, 
then "education has no value for the future of 
mankind, and its benefits are confined exclusively 
to the generation receiving it." ^ And Professor 
Le Conte uses the following language : " If it be 
true that reason must direct the course of human 
evolution, and if it be also true that selection of the 
fittest is the only method available for that pur- 
pose ; then, if we are to have any race improvement 

^ Quoted by Alfred Russel Wallace in ** Studies, Scientific and 
Social," Vol II, p. 508. 



at all, the dreadful law of the destruction of the 
weak and helpless must, with Spartan firmness, be 
carried out voluntarily and deliberately. Against 
such a course, all that is best in us revolts." ^ Mr. 
Benjamin Kidd, in his well-known work, ** Social 
Evolution," attempted a sociological treatment of 
Weismannism. According to him, there is a nec- 
essary antagonism between the interests of the in- 
dividual and the interests of society as a whole. 
He claims that the progress of the race results 
from a growth of population, which is excessive 
when we regard it from the standpoint of the in- 
terest of the individual. The excessive population 
must lead to the rejection of the inferior members 
of society, allowing the superior alone to live, and 
to continue the race. The unfit must become ex- 
tinct. It is the office of religion, according to this 
theory, to induce the individual to follow a line of 
conduct which is antagonistic to his own interests, 
and for which reason affords no sanction. Reli- 
gion, then, has as its function, to induce the indi- 
vidual to submit to the sacrifice of his interests 
for the sake of the whole, and to afford him con- 
solation while he is doing so. We reach in this 
development the logical outcome of one line of 

But it was not long before careful observation 
revealed other aspects of nature's processes. Mr. 
Alfred Russel Wallace long ago called attention to 

^ Quoted by Alfred Russel Wallace in ** Studies, Scientific and 
Social," Vol. II, p. 508. 



the comparatively painless character of the struggle 
among animals, and to the large amount of happi- 
ness in their lives. After reviewing the ethical 
aspect of the struggle for existence, he expressed 
the opinion that it affords "the maximum of life 
and of the enjoyment of life with the minimum of 
suffering and pain." ^ When we watch animal 
existences as a whole, and not in exceptional mo- 
ments, can we conclude otherwise? But subse- 
quent observers, going farther, have called atten- 
tion first to the fact that the struggle is not for 
life merely, but for the life of others. These 
others are first of all offspring, but later mates and 
companions. Again, attention has been called to 
association and mutual aid among animals as part 
of the struggle for existence, and we have come to 
see that cooperation and the ability to cooperate 
are powerful weapons, even in the competitive 
subhuman struggle for existence.^ 

1 " Darwinism," p. 40. 

2 Consult the series of articles on " Mutual Aid " by P. Kropotkin 
in the Nineteenth Century ^ September and November, 1890, April, 
1891, and January, 1892, August and September, 1894, January and 
June, 1896. 

These articles with a few additions have been published in bopk 
form under the title " Mutual Aid a Factor of Evolution." Mutual aid 
is traced by Kropotkin continuously from the lower animals to human 
beings. A distinction must be made, however, and a radical one. 
Among the lower animals mutual aid is a biological fact, which is a 
result of increased efficiency in the struggle for existence either with 
other animals or the physical environment, that is, the obstacles to 
existence in nature. This is different from the conscious coopera- 
tion of men in their higher activities. 



We must hasten on to the point where, as a 
result of organic evolution, we have the emergence 
of man. Among primitive men competition seems 
at first to take on more cruel forms than among 
animals.^ But if evolution has apparently gone 
back a few steps, it is only to move forward 
mightily and unceasingly as social evolution for 
the achievement of ends whose grandeur we as 
yet but faintly apprehend. Competition, begun 
far below man with the very beginnings of life, 
persists as one of the most fundamental laws of 
animate existence, but evolution carries it to higher 
and ever higher planes. Primitive competition in- 
cludes a narrow circle of association and, beyond 
that, slaughter for economic advantage. With 
social evolution slaughter gradually recedes into 
the background and falls below competition into 
the region of crime.^ When men considered it 
dishonorable to gain by the sweat of the brow 
what could be won by the sword, battle belonged 
to economic competition ; not so in the age of in- 
dustry. From early times, and until recently, the 
competitive social order found within its frame- 
work a place for slavery ; but as a result of social 
evolution, continued for ages, slavery falls below 
the plane of competition and is now regarded as 

1 See Darwin's «* Descent of Man," R. Ill, Ch. XXI, where he 
compares favorably a monkey and baboon with savages. 

2 Huxley says of civilized man that " in extreme cases he does 
his best to put an end to the survival of the fittest of former days 
by axe and rope." See " Evolution and Ethics," p. 6, 



incompatible with civilization. Piracy, until a com- 
paratively recent period of the world's history, 
held an honorable place within the competitive 
processes whereby men secured economic gain; 
but that in turn has fallen outside of and below 
the social order of competition.^ 

But since the beginning of this century, along 
with the persistence and increasing intensity of 
competition, elevation of the plane of competition 
has kept pace with the rapidity of social evolution. 
The labor of very young children has been out- 
lawed ; the labor even of grown men has in many 
cases been restricted, and unwholesome conditions 
and oppressive practices in numberless instances 
have been put below the plane of competition. 
We need not retrace this familiar ground. A 
former president of this Association, in one of its 
early publications ^ declared that one of the func- 
tions of government is to raise the ethical level of 
competition. He was himself surprised to find the 

1 Piracy and commerce were in primitive times very generally 
closely associated, and the former must be regarded as one of the 
chief origins of the latter. In the time of Homer the Phoenicians 
were both pirates and merchants. Where they had an opportunity 
by reason of superior strength to take goods from strangers, they 
did so without hesitation and apparently without the slightest 
moral scruples. Where, however, they came in contact with those 
too strong to be robbed, they appeared as traders and made profit- 
able exchanges. " Phoenician " signified to the Greeks liar, thief, and 
kidnapper. See Keller's " Homeric Society," pp. 14-15. 

« Henry C. Adams, " The Relation of the State to Industrial 
Action." Publications of the American Economic Association, 
VoL I, No. 6, January, 1887, pp. 507-508. 



impression that the phrase produced. It produced 
that profound impression precisely because it is 
so pregnant with meaning. The phrase is a key, 
opening mysteries and revealing reconciliations of 
science and humanity. 

We have already mentioned the fact of associa- 
tion among animals for mutual aid. Social evolution 
among men reveals growing association along with 
competition. One essential feature of social evo- 
lution, in its bearing on competition, is the enlarge- 
ment of the associated competitive group. Here 
again the temptation to trespass upon your patience 
is strong, but it must be resisted. Many an ad- 
dress could be occupied entirely with a discussion 
of the grouping of men within the competitive 
social order. Thus we early find voluntary, loosely 
formed groups of employers pursuing common 
purposes ; and also groups of workingmen likewise 
seeking to promote common interests. Again we 
notice a permanent organization of labor on the 
one hand and of capital on the other. Then we 
discover political associations embracing within 
themselves an infinite variety of competitive 
groups ; and these political associations themselves 
having competitive features extend from the small 
hamlet to the mighty nation.^ But competition 
does not stand alone. With it are associated sym 
pathy, benevolence, and public authority. More- 

^ On this point the reader may compare Tarde's ** Social Laws," 
pp. 29-133, and Fairbanks* "Introduction to Sociology," pp. 221- 



over, wisely directed humanitarianism strengthens 
each group, while ruthless selfishness among the 
members of the group gradually destroys power 
in competition.^ The larger the competitive group, 
the wider becomes the sphere for generosity, the 
larger the safe scope of pity, and the milder may 
the competition become for the individual. Wit- 
ness how the progress of modern nations in 
philanthropy attends growing efficiency in their 
economic struggles. International competition is 
a stem fact of our time. Is it not equally a fact 
that the most potent nations in this great dramatic 
world-wide struggle of interests are precisely those 
nations in which we find the highest individual 
and social development of altruism ? Association 
and cooperation, the healing touch, benevolence, 
love, are all compatible with competition. 

Fear has sometimes been expressed lest the 
humanitarian side of social evolution should lead 
to weakness and degeneration, and the world be 

* Darwin saw this very clearly and attributed the social instincts, 
with all that they imply, to natural selection. Social instincts in- 
clude protection, sympathy, and love as important elements, and 
the result is mutual protection and aid, giving a distinct advantage 
to groups having these traits over those not possessing them, or 
possessing them in less high degree. To use Darwin's own words : 
** Animals endowed with the social instincts take pleasure in one 
another's company, warn one another of danger, defend and aid 
one another in many ways. These instincts do not extend to all 
the individuals of the species, but only to those of the same com- 
munity. As they are highly beneficial to the species, they have in 
all probability been acquired through natural selection." "De- 
scent of Man," R. Ill, Ch. XXI. 


converted into Goethe's vast hospital. Such appre- 
hension, I believe, does not rest upon a critical 
analysis of the forces at work in modern civiliza- 
tion. It is true that benevolence, manifested in 
and through progress, may keep alive some weak 
individuals, who in a harsher age would have 
perished, and that these weak individuals may take 
part in the propagation of the species, eventually 
leaving behind an enfeebled progeny. But with 
all its mildness, civilization lessens unfit repro- 
duction, and, upon the whole does so to an ever 
increasing extent. It puts the feeble-minded in 
asylums, and discourages the marriage of pau- 
pers; while in its new attitude toward the crimi- 
nal classes it shows an increasing inclination to 
detain them until it receives evidence that their 
malady is cured.^ Moreover, by sanitation and 
other measures, modern civilization increases the 
strength and vigor of those who do survive. 
Comparisons of civilized men with savages and 

1 It must not be supposed that it is intended to assert that this 
movement has gone far enough. A few years ago it was estimated 
that only ten per cent of the feeble-minded were put under custo- 
dial care. All of them must be thus treated before the demands of 
benevolence and competition can be fully harmonized. But the 
movement has begun and is gathering force. It receives the sup- 
port of modern scientific charity, and those workers in the field of 
charity who have sounded the alarm concerning the effects in this 
particular of indiscriminate charity, are optimistic concerning the 
power of society to control the evil in question and secure rational 
elimination along the lines indicated. This subject is further 
treated in Pt. II, Ch. Ill, which deals with " Social Progress and 
Race Improvement." 



with semi-civilized peoples, reveal the superiority 
of the former in physical vigor.^ It is probable 
that never in the world's history have there been 
men and women whose average of efficient strength 
in the economic sphere was so great as that of the 
men and women who to-day inhabit Germany, Eng- 
land, and the United States of America. 

Now, it is to be noticed that the selective pro- 
cesses which we are adopting in civilized society 
involve a decrease of pain and an increase of hap- 
piness in proportion as knowledge advances. The 
problem is to keep the most unfit from reproduc- 
tion, and to encourage the reproduction of those 
who are really the superior members of society. 
When we take up the measures in detail which are 
recommended by wise men for the accomplishment 
of this purpose, we find that in the long run they 
increase the true happiness of the individual.^ 

Competition is the chief selective process in 

* The following quotations from Bucher's " Industrial Evolu- 
tion " confirm this view. " They [the Negritos in the Philippines] 
age early ; at forty or fifty the mountain Negritos are decrepit, 
white-haired bent old men." English translation, p. 9. " All the 
races involved in our suryey ... in bodily condition give the im- 
pression of backward, stunted growth. We are not on that account, 
however, justified in regarding them as degenerate race-fragments. 
The evidence rather goes to show that the more advanced races 
owe their higher physical development merely to the regular and 
more plentiful supply of food which agriculture and cattle-raising for 
centuries past have placed within their reach." Cf. Alfred Russel 
Wallace's " Studies Scientific and Social," Vol. II, pp. 494-497. 

'This subject receives more detailed and careful treatment in 
the chapter on " Social Progress and Race Improvement." 



modem economic society, and through it we have 
the survival of the fit. But what do we mean by 
"the fit*'? We all know to-day that fitness has 
reference simply to conditions of a particular time 
and place. Bold and aggressive pirates were at 
one time fit for survival, but now they are likely 
to come to an untimely and ignominious end. 
Modern society itself establishes, consciously or 
unconsciously, many of the conditions of the strug- 
gle for existence, and it is for society to create 
such economic conditions that only desirable social 
qualities shall constitute eminent fitness for survi- 
val. A kind of society is possible, in which the 
beggar has this fitness, while the conditions in 
another society may be most unfavorable to the 
growth of parasitical classes. 

The socially established competitive methods 
and the socially established ends to be attained by 
competition determine the kind of men who will 
survive in competition. Let me offer an illustra- 
tion. To-day the civil service of the modem na- 
tion furnishes an opportunity for a livelihood to a 
considerable percentage of the population. Com- 
petition for admission to the civil service in order 
thereby to secure a support is found when we have 
the so-called spoils system, and the competition is 
intense and frequently bitter. This competitive 
contest issues in the survival of men with qualities 
known to us all. Civil-service reform does not 
remove competition ; on the contrary it extends 
competition, but the difference in methods pro- 


duces corresponding differences in results. On 
the one hand, the extension of competition lessens 
bitterness, because it is more in consonance with 
our ethical demand for equality of opportunity; 
and the difference in competitive tests for success, 
issues in the survival of men- with qualities of 
another sort from those who come to the top under 
the spoils system, and with qualities, most of us 
will say, of a higher kind. 

Competition increasingly comes to mean worthy 
struggle, and true progress implies that success 
will be secured hereafter by conformity to higher 
and ever higher, nobler and ever nobler ideals. 

Mr. Alfred Russel Wallace and Professor Lester 
F. Ward have called attention to the superiority of 
man's selection to nature's selection. Professor 
Ward has thus expressed the idea : " The econom- 
ics of nature consists, therefore, essentially in the 
operation of the law of competition in its purest 
form. The prevailing idea, however, that it is the 
fittest possible that survive in this struggle is 
wholly false. The effect of competition is to pre- 
vent any form from attaining its maximum devel- 
opment, and to maintain a comparatively low level 
for all forms that succeed in surviving. This is 
made clear by the fact that wherever competition 
is wholly removed, as through the agency of man, 
in the interest of any one form, that form imme- 
diately begins to make great strides and soon out- 
strips all those that depend upon competition. 
Such has been the case with all the cereals and 



fruit trees ; it is the case with domestic cattle and 
sheep, with horses, dogs, and all the forms of life 
that man has excepted from the biologic law and 
subjected to the law of mind; and both the agri- 
cultural and the pastoral stages of society rest 
upon the successftd resistance which rational man 
has offered to the law of nature in these depart- 
ments. So that we have now to add to the waste 
of competition its influence in preventing the 
really fittest from surviving." ^ 

While in general we must agree with Professor 
Ward, it is open to question whether or not the 
process which he describes is to be called the sup- 
pression of competition, for his language is apt to 
lead to erroneous conclusions on the part of most 
readers. We think of competition among men as 
a selective process, whereby men are favored and 
chosen for the fulfilment of social tasks. It is this 
selection which he apparently has in mind. Now, 
what man does by his culture of plants and ani- 
mals is simply an improvement of unaided nature. 
He assists nature, and removes and destroys as 
completely and as rapidly as possible those species 
and individuals which are not adapted to his pur- 
poses, and then he makes the best possible envi- 
ronment for those which serve his purposes most 
fully. Man makes competition do its perfect 
work. Man establishes the environment and 
selects the plants and animals for survival in the 
prearranged environment. It may be well to 

1 " Outlines of Sociology," pp. 257-258. 


repeat in different words what has already been 
said in regard to fitness, for the correct idea of fit- 
ness as a purely human idea cannot be too strongly 
emphasized. Weeds are just as fit for survival as 
the most nutritious food plant, so far as we can see 
when we have reference solely to external nature. 
Fitness means conformity to the conditions of the 
environment, and speaking from man's point of 
view it denotes both environment and survival suit- 
able to human purposes. It is anthropo-teleolog- 
ical, to use a convenient technical term found 
frequently in Professor Ward's writings. Man 
makes an environment increasingly artificial as 
time goes on, and as he gains increasing power 
over the forces of nature.^ 

If the foregoing considerations are possessed 
of validity, we can readily see one of the tests to 
which we must submit proposed measures of 
social amelioration. A good social measure must 
strengthen the individual and the group for com- 
petition. On the other hand, the test of a bad 
condition is that it weakens individuals and groups, 
in the competitive struggle. Let me offer a single 

In New York City a Tenement House Commis- 
sion has been investigating the housing of the 
poorer classes in that city. Dr. Edward T. De- 

* John Fiske has something very good on this in his " Destiny 
of Man," pp. 33-34, where he says, " Natural selection itself will by 
and by occupy a subordinate place in comparison with selection by 
man." But selection by man means regulated competition. 



vine, Secretary of the Charity Organization Soci- 
ety of New York, testified before the Commission 
as follows: "There is much destitution directly 
due to overcrowding, to the lack of light and air, 
and to infected walls, ceilings, and floors. The 
experience of the agents and visitors of the Char- 
ity Organization Society confirms what physicians 
have said in regard to the danger from tuber- 
culosis and other diseases. The chances of recov- 
ery are much less because of the lack of vitality 
due to the unfavorable physical conditions under 
which the people are obliged to live." ^ Here our 
test reveals a thoroughly bad competitive con- 
dition. But, on the other hand. Dr. Devine stated 
that, " While the Commission might not be able to 
devise laws that would directly lower rents, it 
would be possible to provide for greater decency 
and comfort, and for more of the conditions that 
make for life and health, without necessiarily in- 
creasing rents." 2 We see in this last suggestion 
conformity to the tests of a desirable measure of 
social reform. 

If our analysis is correct, it clearly follows that 
competition is a permanent feature of human 
society. It begins with the lowest orders of ani- 
mals and continues its action among the highest 
orders of men. But it continually mounts to 
higher and higher elevations, and means rivalry 

* Charities^ the official organ of the Charity Organization Society 
of New York, December i, 1900, p. 18. 
2/^jV/., p. 19. 



for ever better and better things. We leave behind 
contests for bare subsistence to engage in contests 
for noble prizes of the mind and for opportunities 
for social service. 

We can, then, never allow competition to cease. 
Combinations of labor and combinations of capital 
may expand freely, so long as these combinations 
mean merely association and cooperation. But 
^when combinations mean monopoly, either compe- 
tition must be restored or, where this is impossible, 
the ends of competition must be secured by other 
methods of social control; and if these methods 
of social control in some cases mean public owner- 
ship and management of industries, a place must 
be opened for the competitive principle in the 
terms of admission to public employment. 

It is at this point important to make a distinction 
too often overlooked; namely, the radical diffet- 
ence between that socialistic extension of govern- 
mental activity which has in view the suppression 
of competition, and that conservative demand for 
an extension of governmental activity which has 
in view the maintenance of competition. There 
are certain conditions of success in competition 
which many economists believe cannot be supplied 
individually, but must be furnished by collective 
action. Irrigation offers an illustration. It appears 
to be the general opinion of careful students of irri- 
gation, that the laws of private property applied 
to water used for purposes of irrigation, ultimately 
produce cessation of competition ; in other words, 
L 145 


monopoly; and that as a condition of permanent 
and wholesome competition along with associated 
efiForts, large public activity is required in the sup- 
ply of water. A recent writer uses these words, 
and, as I understand it, he simply voices the con- 
census of opinion among experts. "In the vast 
majority of instances, and over the larger portion 
of the arid region, costly works will be required, 
and these can only be supplied by some form of 
public enterprise. The dividends upon the invest- 
ment must be looked for, not in the strong boxes 
of security-holders, but in the increase of national 
wealth, in social progress, and in economic gains." ^ 
If this statement is correct, we who believe in com- 
petition must, in order to secure the conditions of 
its maintenance, ask for larger governmental activ- 
ity in matters of irrigation. 

•I regret that I can do no more here and now 
than merely to allude to two somewhat antago- 
nistic lines of evolution. One is the movement 
which approaches — without hope of ever reach- 
ing — real equality of opportunities in economic 
competition. This is one of the most powerful 
movements of the century just drawing to a close 
and must be borne clearly in mind by any one who 
would understand the great historical movements 
of that century. The other line of development 
is found in the construction of great institutions 
which shut in and limit competition, but which 

1 William E. Smythe, on "The Struggle for Water in the West," 
Atlantic Monthly, November, 1900. 



nevertheless are the very foundations upon which 
our civilization rests; the institutions which may 
be likened to social savings-banks or depositories 
of race achievements. I have here in mind the 
great economic-juridical institutions of society, 
such as private property, inheritance of property, 
and vested interests. The progressive approxima- 
tion to equality in opportunities must not be per- 
mitted to go so far as to undermine these institu- 
tions. In the mutual adjustments of these two 
lines of evolution, namely, the equality-of-oppor- 
tunity movement and the institutional movement, 
we have given us one of the weightiest and at the 
same time most delicate tasks of the twentieth 

Competition thus conceived is beneficent, and 
the competitive order, rightly controlled by society, 
furnishes to men the maximum of pleasure with a 
minimum of pain. Not only does it insure prog- 
ress for the race, but to an increasing extent all 
men participate in the benefits of this progress. 
We have no evidence that the competitive order 
is ultra-rational, and still less need we believe that 
it is anti-rational, as Mr. Kidd asserts. 

Competition, suitably regulated, gives us a brave, 
strong race of men. Will they not use their 
bravery and strength for themselves exclusively ? 
This question arises naturally, but the nature of 
the answer to it has already been intimated. We 
do not observe that weakness and cowardice are 
favorable to a considerate treatment of others; 



bravery and strength make it relatively easy to 
be merciful; and there are ever in our civilized 
society forces at work which bend to the purposes 
of society bravery and strength. Social evolution 
accomplishes this result. It has been well said 
that as organic evolution gives us man, so social 
evolution gives the ideal man.^ But economic 
competition is an essential constituent of that 
social evolution which is producing the ideal man ; 

^ This thought finds beautiful expression in the following lan- 
guage of the late Professor Joseph Le Conte : " Organic evolution 
reached its term and completion in achieving man. But evolution 
did not stop there; for in achieving man it achieved also the 
possibility of another and higher kind of evolution, and was there- 
fore transferred to a higher plane, and continued as social evolu- 
tion or human progress. Now, as the highest end, the true 
significance, the raison d^Ure of organic evolution, was the achieve- 
ment of man; so the highest and real meaning of society and 
social progress is the achievement of the ideal man. This view 
entirely changes the relation of the individual to society by giving 
a new and nobler meaning to society. Individual interests must 
be subordinated to social interests, not only because society is the 
greater organism, nor even because it represents all other individ- 
ual interests; but also, and chiefly, because society is the only 
means of achieving the ideal. The higher law, from this point of 
view, is loyalty, not to society, as the ancients would have it, nor 
yet to the conscience, as we moderns would have it, but to the 
divine ideal of humanity. Fortunately for us, however, the highest 
interests of the individual are also thereby subserved. . . , But 
subordination is not sacrifice. On the contrary, it is the highest 
success for the individual. In subserving this, the highest interest 
of humanity, each individual is thereby subserving his own highest 
interests. In striving to advance the race toward the ideal, he is 
himself realizing that ideal in his own person." — "The Effect of 
the Theory of ^volution on Education." Proceedings of the 
National Educational Association, 1895. 



and with competition are mingled other regulative 
principles. Psychologically, the ego and the alter 
ego, self and other self, arise together; economi- 
cally they engage in many a conflict, but their 
spheres of interest are never entirely antagonistic 
to each other in the struggle for life. The ego — 
the self — enlarges the sphere of its selfhood ; and 
this widening and deepening goes on until the 
Christian ideal of humanity is at last attained. 

But the upward struggle is part and parcel of 
the attainment of ideals; and, rightly conceived, 
elevated to a sufficient height, this struggle in 
economic life means competition ; it means rivalry 
in the service of self and other selves — rivalry in 
the upbuilding of the ideal man in the ideal society. 


While competition is mentioned in every sys- 
tematic economic treatise, it has not received 
adequate scientific examination. Most economic 
writers have assumed the existence of competition 
without any critical examination of its nature and 
its workings, although certain hypotheses concern- 
ing it underlie all explanations of economic life in 
modem times. Somewhat more attention has been 
given by economists to competition in recent years, 
but it still remains for an economist to treat the 
subject exhaustively. The subject reaches beyond 
economics, and much of the best writing on it thus 
far has been done by those who are not profes- 



sional economists. A few references which will 
prove helpful are given : — 

Baker, Charles Whiting, Monopolies and the People. 
3d ed. New York, 1899. This work is especially note- 
worthy in this connection on account of Ch. X, pre- 
senting the Theory of Universal Competition, and Ch. 
XI, Laws of Modern Competition. This is one of the 
few attempts to define competition accurately and to 
formulate laws explaining its economic action. What 
has been done is scarcely more than a beginning, but 
as such it deserves more attention than it has received 
from economists. 

Bascom, John, Social Theory, New York, 1895. Pt. II, Ch. 
II, Postulates of Economics. 

Clark, John B., Distribution of Wealth. New York, 1899. 
This presents a theory of wages, interest, and profits as 
determined by competition working in an ideal manner. 
Many economists will be inclined to criticise the theory 
of competition here presented as altogether too opti- 
mistic. It must be remembered, however, that what is 
presented is not a picture of the actual world, but of the 
operation of competition in a world in which many 
restraints upon the workings of competition now existing 
are removed. 

Clark, John B., and Giddings, Franklin H., The Modem 
Distributive Process. Boston, 1888. The first chapter 
of this book is upon the Limits of Competition, by Pro- 
fessor Clark, and the second upon the Persistence of 
Competition, by Professor Giddings. Even those not 
agreeing entirely with the positions taken by these two 
authors will admit that their treatment deserves careful 

CooLEY, Charles H., Personal Competition. New York, 
1899. This is one of the Economic ^Studies published 
by the American Economic Association. It is interest- 
ing and suggestive. 



Dictionary of Philosophy. Edited by J. Mark Baldwin. 
New York, 1902. Articles, Competition; Existence, 
Struggle for; Rivalry. 

FiSKE, John, The Destiny of Man, viewed in the Light of 
his Origin. Boston, 1884. Ch. XI, on the Universal 
Warfare of Primeval Man, and Ch. XII, First checked 
by the Beginnings of Industrial Civilization, have special 
significance in the study of competition. This subject 
finds further treatment in Mr. Fiske's more elaborate 
work, Outlines of Cosmic Philosophy, 2 vols., Boston, 
1879; ^^w edition with an introduction by Professor 
Josiah Royce, 4 vols., Boston, 1903. 

Huxley, Struggle for Existence. Nineteenth Century, Feb- 
ruary, 1888. 

Kropotkin, p.. Mutual Aid a Factor of Evolution. New 
York, 1902. 

Marshall, Alfred, Some Aspects of Competition. Presi- 
dential address delivered to the Economic Science and 
Statistics Section of the British Association at Leeds, 
1890. Published in the Journal of the Royal Statistical 
Society^ December, 1890. 

Wagner, Adolf, Allgemeine Volkswirtschaftslehre. Er»ter 
Theil, Grundlegung. Leipzig, 1894. 2te Ausgabe, 3tes 
Kapitel, pp. 223-251. This is a reference for specialists 
rather than the general reader. Wagner is noteworthy 
on account of his treatment of the legal basis and limita- 
tions of competition. 

Wallace, Alfred Russel, Studies Scientific and Social. 
2 vols. New York, 1900. Vol. I, Chs. XIV to XVII 
inclusive, dealing with the Theory of Evolution, and 
Ch. XXIII, Human Selection. Vol. II, Ch. XXVIII, 
True Individualism the Essential Preliminary of a Real 
Social Advance. 
Darwinism. London and New York, 1889. 

WiLLOUGHBY, W. W., Social Justice. New York, 1900. 
Ch. IX, The Ethics of the Competitive Process. 




It is proposed, in this chapter, to treat somewhat 
more in detail a few points which are discussed 
only in a very cursory way in the preceding. A 
general view of competition has been presented, 
and an effort has been made to show that we have, 
in the stimulus and selection which competition 
affords, both a permanent and a beneficial eco- 
nomic and social force. While the present work 
aims to be suggestive rather than exhaustive, 
it is felt, nevertheless, that at least a few dis- 
criminations must be made, and a few features of 
competition further elucidated, in order that mis- 
understanding may be avoided and thought di- 
rected along right lines. ^ 

It is obvious that the word " competition " is em- 
ployed in a very wide sense so as to cover a mul- 
tiplicity of activities, having in them little in 
common, except rivalry of one sort and another. 
The " Century Dictionary," it will be recalled, de- 

^ The author trusts that he may, without impropriety, repeat the 
statement that he hopes, in a later work in the Citizen's Library, 
to give a fuller treatment of competition under the title " Custom 
and Competition." 



fines competition as " the act of seeking or endeavor- 
ing to gain what another is endeavoring to gain at 
the same time ; common contest, or striving for the 
same object; strife for superiority; rivalry." We 
have rivalry in many different fields, as among 
plants and animals ; we have among men contests 
of physical strength, and also emulation in artistic 
and intellectual pursuits; we have military and 
commercial rivalry among groups and societies ; it 
will conduce to clear thinking if we consider some 
distinctions which should be made in the uses of 

Let us take up, first of all, the term " rivalry." 
We may distinguish between three main forms of 
rivalry.^ The first main form of rivalry is struggle 
for existence. This is biological rivalry, and to be 
successful involves reproduction. " The essentials 
of biological rivalry are survival with subsequent 
production of offspring by and with physical he- 
redity." 2 Biologically, then, a being might die of 
old age and yet not survive, in case this being has 
no offspring. The second form of rivalry is per- 
sonal rivalry or emulation. It is the contest among 
individuals for personal advantage of some kind. 
Individuals contend with one another for the sake 
of economic gain, or it may be even for victory in 
some game of skill. It always involves the element 

* The general classification found in the articles " Rivalry " and 
** Struggle for Existence " in the " Dictionary of Philosophy," edited 
by Professor J. Mark Baldwin, is followed at this point. 

* Quoted from article "Rivalry" in the "Dictionary of Phi- 


of consciousness, and is, therefore, psychological, 
and never simply biological, in the narrow sense 
of the term. In the third place, rivalry may be 
commercial and industrial, and becomes economic 
competition, which includes a large part of personal 
rivalry. # 

The struggle for existence is a struggle to main- 
tain life and to leave offspring. This also takes 
three forms, following the classification of Pro- 
fessor Baldwin. There is first a struggle for food 
among animals when there is a deficiency on ac- 
count of overpopulation. There is, in the second 
place, a struggle of animals with one another. 
This is not merely a struggle of individuals as in- 
dividuals, but likewise a struggle of group with 
group. Even among the lower animals this is the 
case, as has already been pointed out in the pre- 
ceding chapter.' Among men this form of struggle 
becomes increasingly a struggle of group with 
group, and nation with nation. The third form of 
struggle is struggle with the obstacles which are 
imposed by the physical environment of animals, 
as heat, cold, etc. Adjustment is the process by 
which living beings succeed in meeting the con- 
ditions of inorganic environment. As a result 
of this struggle for existence, we have survival of 
those who are called the fittest ; fittest, that is to 
say, with reference to conditions of time and place. 
It is to be noticed that biologists are laying increas- 
ing emphasis upon the second and third forms of 
struggle for existence, and not upon simple con- 



tests of one individual with another of like species, 
in order to secure food supply. This is especially 
significant when we come to the struggle among 
men, which is less and less a struggle for mere 
subsistence. It is true that there are very large 
numbers, and in older countries, even great classes, 
of men, who are struggling simply for the neces- 
saries of life, but it is also true that this struggle is 
gradually receding into the background, inasmuch 
as it involves in civilized society a decreasing pro- 
portion of the population. Famine was once com- 
mon in all countries, but has now practically 
disappeared in those economically most advanced. 
There are vast areas in the United States in which 
the problem of subsistence has been so far solved 
that the conscious struggle among men is al- 
most altogether for something decidedly above 

The word "competition" is loosely used to cover 
all the meanings of rivalry and struggle for exist- 
ence which have been mentioned ; but in economic 
discussions it is limited to struggles for economic 
advantage, and perhaps generally it would be well 
to confine the word "competition " so far as possible 
to the realm of economics. When, however, we 
come to competition with an economic import we 
also have a great variety of meanings. Economic 
competition is not any struggle of conflicting in- 
terests, inasmuch as it would then include even 
criminal contests for advantage. This is a point, 
too, which has already been mentioned, but it 



needs to be emphasized, inasmuch as so many in 
the discussions of competition overlook the fact 
of its limitations by custom and law. Competition 
in the large economic sense may be formally de- 
fined as the struggle of conflicting economic interests 
on the basis of the existing legal and social order 
for the sake of economic advantage of one sort or 
another. Competition, then, undergoes a process 
of evolution and is capable of unlimited regulation, 
provided the element of rivalry is not removed. 
Modern competition rests upon a basis of property 
both public and private, and of contract, and 
certain laws and customs which regulate personal 
conditions, giving us servitude or freedom in their 
various forms. Property and contract themselves 
are regulated, and change with economic develop- 
ment. Competition, then, takes for granted the 
fundamental institutions of economic society, and 
these qualify and limit the struggle for existence. 
Competition in a narrower sense is differentiated 
from bargaining. In this narrow sense competi- 
tion consists of the rival efforts of those who 
desire precisely the same thing. It is a competi- 
tion of carpenter with carpenter, of blacksmith 
with blacksmith, and, on the other hand, of em- 
ployer with employer to secure the services of 
labor. As a result of the competition of working- 
man with workingman who offer the same kind of 
services, and of employer with employer who 
desire this kind of services, we have the conditions 
determined for the bargain which takes place be- 



tween the two sides. It is the bargaining which 
directly determines the distribution of wealth, 
giving us wages, profits, rents, etc. Strikes are 
concerned with bargaining rather than with com- 
petition in this narrow sense. A good deal of the 
economic trouble of our time comes from the fact 
that employer does not compete with employer, 
and employee with employee, and thereby fix the 
terms of the bargain made between them ; but tflat 
combination faces combination, and with the partial 
failure of competition to establish the bargain 
which results in wages, profits, etc.j no adequate 
substitute has been found. 

We have a great many different forms of com- 
petition besides those mentioned. We have;what 
is called personal competition, which has in view 
competition largely as a principle of selection of 
men for posts in economic society, and is a prin- 
ciple of organization.^ 

A distinction is also frequently made between 
commercial competition and industrial competition. 
Commercial competition fixes prices on the market 
for the time being, and raises and lowers prices in 
an effort to bring about an equilibrium between 
supply and demand. Industrial competition is 
Competition of investors, and of classes of manual 
and intellectual workers, of such a nature as to 

1 Vide " Personal Competition, its Place in the Social Order and 
Efiect upon Individuals ; with some considerations on Success," by 
Charles H. Cooley, Ph. D., American Economic Association, 
'' Economic Studies,*' Vol. IV, No. 2. 


equalize advantages of various pursuits and occu- 
pations. Competition of shoe manufacturer with 
shoe manufacturer is commercial competition ; the 
shifting of capital from a less to a more profitable 
investment, and the shifting of a mechanic from 
an occupation which pays low wages to one which 
pays relatively high wages, gives industrial com- 

It would take us too far from our present pur- 
pose to enter into a discussion of the various kinds 
of competition which could be mentioned; but one 
further distinction is especially important in the 
treatment of competition and monoply, and that is 
the distinction between competition and industrial 
war. This is a distinction which popular language 
makes, but which has not been often adequately 
elaborated by economic writers. Competition is a 
permanent, steady pressure, whereas industrial war 
among rivals implies destructive attacks, which aim 
at a cessation of hostilities in agreement or com- 
bination. The rivalry of one grocer with another 
gives us an illustration of normal competition, 
whereas the rivalry of two competing gas com- 
panies in one city furnishes us with an illustration 
of industrial war. The first pressure is constant 
and brings benefit to consumers ; whereas the sort 
of struggle in which the gas companies engage 
frequently reduces prices far below cost and de- 

1 Vide Hadley»s " Economics," Ch. Ill, § loo; also, Cairnes* 
" Some Leading Principles of Political Elconomy," Pt. I, Ch. Ill, 
especially § 5. 



stroys values, the struggle keeping up until one 
party or the other is defeated, or until they can de- 
cide upon terms of cessation of hostilities, result- 
ing in some kind of agreement or even consolida- 
tion. The adherents of the competitive order of 
society believe in the possibilities of that normal 
competition which exerts a regular pressure, and 
serves as a stimulus in the efforts of rivals to serve 
the public; whereas the socialists have generally 
believed that all competition must eventually be- 
come industrial war, which will prove the death of 
competition itself. 

This naturally leads us to a discrimination be- 
tween one of the aspects of economic competition 
and the biological struggle for life. The struggle 
for life is frequently a direct and immediate struggle, 
as where two dogs fight for the same bone. Com- 
petition is, in the main, an indirect process of secur- 
ing results. We do not immediately and directly 
seek our food and clothing, but perform social 
services and receive a reward which we exchange 
for food and clothing. We render services to 
society, and society rewards us in what we receive 
in economic commodities and services. Where 
competition is at its best, the more we give the 
larger our reward. It is in this way that competi- 
tion can be spoken of as " a game of give and not 
a game of get.*' ^ 

As competition becomes in modem times, in the 

* Quoted from an address by Professor J. B. Clark, before the 
New York State Conference of Religion, November 20, 1902. 


most advanced countries, increasingly a struggle for 
something beyond subsistence, namely, a struggle 
for conventional necessaries, comforts, and luxuries 
and honors, can it be said that it results in selec- 
tion ? It has the beneficent effect of stimulation, 
but does it result in a selection which affects the 
race ? Is it correct to say, as in the preceding 
chapter, that the reform of the civil service issues 
in the survival of men with qualities superior to 
those who survive under the spoils system? 
Directly and immediately we do not have in this 
case survival in the true biological sense. We 
have survival of certain traits which conduce to 
success, but indirectly competition must have an 
influence upon biological survival. Those who 
have the traits which are fittest for the existing 
environment are those who will advance most 
rapidly, and who will be in a position to marry at a 
comparatively early age, and who will also be 
favored in the selection of marriage. 

It becomes plain from what has already been 
said that the competitive system does not mean of 
necessity a never ceasing scramble and a perpetual 
pushing for advantage. Within the competitive 
system there are protected positions which should 
be the reward of merit. This may be illustrated 
by the case of professors and judges. Excellence 
should be the test of appointment or election, but 
the position once secured it should not be continu- 
ally called in question. The same holds with 
regard to many positions in private employment. 

1 60 


We have all sorts of boards and agencies of social 
control to encourage excellence within the compet- 
itive system. It is surprising, also, in view of 
much that is said about competition, to observe the 
general acquiescence in the rewards of competition 
when these are assigned on the basis of excellence. 
Complaint arises when something which is outside 
t)f and apart from the ability to serve society deter- 
mines the selection. When in the private corpora- 
tion favoritism prevails, and when in public life 
"pulls" determine appointments, we have dis- 
astrous consequences and pronounced dissatis- 

Property also protects men from the fiercest 
attacks of competition. The eildeavor to secure a 
relatively protected position stimulates the efforts 
of men and leads to the accumulation of property. 
This is socially beneficial, and one of the most im- 
portant lines of true social reform which can be sug- 
gested is the encouragement of accumulation of 
property through saving and frugal habits gener- 
ally. It should be one of the special functions of 
government to afford opportunities for saving 
to those who are economically the weaker elements 
in the community, and to protect savings so as to 
have the widest possible diffusion of property. 
The arguments for postal savings-banks are con- 
clusive, and have never been answered. 

We must not go to the extreme position taken by 
some adherents of competition. Competition as it 
exists at present has its very grave evils, and a 
M i6i 


competitive system must always have its dark side. 
The position which a rational adherent of the com- 
petitive order takes is that to an ever increasing 
extent the evils of competition will be cured by the 
processes of social evolution, including individual 
and social self-conscious effort, and that, on the 
other hand, the evils which must remain are less 
than those of any other economic system, such as 

Professor Baldwin shows in a most interesting 
manner, in his "Social and Ethical Interpretations," 
that the very processes of competition psychologi- 
cally lead to the cultivation of altruism as well as 
egoism. Competition is a social process, and in it 
we must think of other selves as well as our own 
selves. We do necessarily picture situations to 
ourselves in which others are involved as well as 
ourselves, and we are forced to reflect upon the 
welfare of these others. 

While adhering to competition we attempt to 
remove the worst abuses which now exist, such as 
those of the sweating system, the employment of 
young children, insanitary conditions in home and 
workshop, needless accidents to employees, partic- 
ularly those of railways and great industrial estab- 
lishments, and the adulteration of food products. 
Along all these lines we are making progress which 
can and should be greatly accelerated. There 
must necessarily remain economic evils which must 
be borne, and we have the opportunity for the cul- 
tivation of fortitude on the one hand and sympathy 


on the other. The need of the ethical teacher and 
the preacher will never cease. 

Another line of importance is suggested by the 
observation that competition has done its work 
when old age comes on, and that every provision 
for honorable old age is desirable, which first is 
practicable, and which secondly does not discour- 
age proper effort on the part of those who have 
not as yet reached old age. This suggests a large 
extension of insurance, and in time old-age pen- 
sions under suitable regulations. 

In conclusion, it must be admitted that there 
remains what has been termed the human rubbish- 
heap of the competitive system. There are those 
who are not able to live in its strenuous atmosphere. 
The sad fact, however, is not that of competition, 
but the existence of these feeble persons. The 
sadness consists in the hard facts of life of which 
competition takes cognizance. If the weakest are 
favored and their reproduction encouraged, we 
must have social degeneration. The recognition 
of these hard facts, with suitable action taken with 
reference to them, reduces the amount of human 
pain for the present and the future by public and 
private charity. The socially rejected must be 
cared for and given as happy an existence as 
possible, provided only that we do not encourage 
the increase of those who belong to this sad human 

^ This chapter is so closely related to the preceding one that no 
separate bibliography is required. 




The writer has taken the position in his treat- 
ment of competition that the altruism which has 
been developed in competitive society, and which 
has manifested itself in an infinite variety of 
methods for the alleviation of human suffering, 
prolongation of life, and the amelioration of man's 
social and physical environment, has been co- 
existent with the increasing strength and efficiency 
of men in modern civilized society. There are 
many who have taken a different position. Pro- 
fessor Alfred Marshall, the economist, has very 
grave apprehensions concerning the survival of 
the weak and feeble, who owe their survival to 
modern humanitarianism, modern, medicine, and 
improvements in sanitation; while Mr. Alfred 
Russel Wallace, the great naturalist and co-worker 
with Darwin, tells us that on account of these 
modern improvements Darwin took a gloomy 
view of the future. But the present writer does 
not believe that these apprehensions are warranted 
by the facts in the case. Unfortunately, however^ 
strange as it may seem, there never has been any^ 
serious investigation either by sociologists or biolo- 


gists of the relative strength and vigor of man in 
the various stages of his evolution from savagery to 
the highest forms of civilization. There has been a 
great ^eal of talk on this subject, but no strictly 
scientific work. That there should be so much talk 
on the subject without any scientific basis, at first 
seemed to the writer so incredible that he felt 
obliged to ask his biological and sociological 
friends if they knew of any investigation into the 
facts which would warrant the frequent assertion 
of a dangerous decline in man's physical vigor. 
The same negative answer has been returned in 
every case. 

The reasons for the view of a possible decline 
in vigor, due to modern improvements resting 
upon a combination of philanthropy and science, 
are obvious enough. The reasoning runs about 
as follows : Philanthropy and science keep alive 
men who would otherwise perish. These men 
reproduce their kind, and the result is an enfee- 
bled progeny. Reproduction goes on, and as 
heredity determines chiefly the characteristics of 
those who live, we have a feebler parentage lead- 
ing to a feebler race of men. 

While assertions of this kind are frequently 
made, they produce comparatively little visible 
effect upon the growth of altruism and science. 
Even the most cold-blooded scientific men continue 
their researches, and aim both by preventive and 
curative methods to keep alive as many as possible, 
and to prolong the life of each individual to the 


utmost limit. The fund of altruistic sentiment 
continues to grow in the meantime. It would 
seem as if there were a very deep instinctive feel- 
ing that such good things as philanthropjr and 
progress in knowledge could not, all appearances 
to the contrary notwithstanding, prove evil. The 
implications of the position that modern progress 
is leading to increasing survival of the unfit are 
truly startling. The great advances in medicine 
are in the region of preventive medicine, as it is 
called, which aims by general sanitary measures 
and correct mode of life to prevent disease, or at 
any rate to reduce it to its lowest terms. But if 
this is leading to an increasing number of an in- 
creasingly feeble population, should it not be 
checked ? Man's increased power in the produc- 
tion of wealth means that it is easier than hereto- 
fore to furnish to all the necessities and even the 
comforts of life. The struggle for bare existence 
declines. If the view to which reference has been 
made is sound, should not efforts be put forth to 
hold back the wheels of industrial progress ? May 
there not have been, then, a higher wisdom than 
has ever been supposed in the efforts of riotous 
workingmen in England, early in the last century, 
to smash machines.^ And what shall we say 
about the efforts in India to accumulate a famine 
fund, and extend and improve the means of com- 
munication so as to be able to fight famine 
successfully there as it has been fought success- 
fully in Europe and America.? Why not let the 



famine continue for the sake of race improve- 

We do continue our efforts, science advances, 
and philanthropy marches triumphantly forward. 
Nevertheless, here and there we do find a certain 
scepticism, and possibly in places a partial paraly- 
sis of efforts. 

While we have not had the needed scientific in- 
vestigation of the strength and vigor of man in 
the various stages of his evolution, an analysis of 
the forces at work certainly gives strong ground 
for the belief which the present writer has ex- 
pressed that never before has there been such a 
high average of strength and vigor, and that never 
before has there been such promise of increasing 
strength and vigor for the future. It is true that 
some unfit persons are kept alive, and that some 
of these become parents. We must ask, however, 
first, is this number larger now than formerly ? Is 
this number larger in the present stage of civiliza- 
tion than in the lower stages.? Furthermore, in 
the second place, we must ask whether any forces 
have come into operation to offset, or more than 
offset, the fact that some now are kept alive who 
in an earlier civilization would have perished. 

Taking up the first question, we may say that 
there is every indication that the number of the 
absolutely unfit has not increased, but, on the con- 
trary, has in the most advanced countries tended 
to decline. The parasitical classes are the most 
unfit, and there is evidence that their number has 



been reduced. Statistics would seem clearly to in- 
dicate this in England, and probably in Germany. 
Where serious ani long-continued efforts have 
been made in this country to reduce the number 
of these classes, moderate success appears to have 
been achieved. There have been earlier stages of 
civilization in which beggary was thought to be a 
virtue. It has even been asserted that in Cologne 
at one time one-fourth of the population consisted 
of paupers. Reports of travellers in countries of 
inferior civilization, such as India, lead us to think 
that the strength and vigor of this population is 
far below that of European countries. In any 
stage of civilization beyond the lowest, men and 
women are, as a rule, kept alive ; and it is hopeless 
to expect that they will be allowed to perish 
because they are beings unfit for parentage. But 
it is in the higher stages of civilization that there 
is the most effort made to prevent parentage on 
their part. 

Let us then take up the second line of inquiry, 
and ask what other forces are coming into opera- 
tion which tend to secure race improvement. Race 
improvement is a result of selection on the one 
hand, and of environment on the other. When 
we speak of environment as the cause of improve- 
ment, we do not mean to imply the transmission 
of acquired qualities. It is very true, as Mr. 
Alfred Russel Wallace asserts, that you cannot 
secure race horses by cultivating speed in a miscel- 
laneous assortment of horses, and giving them an 



environment suitable for racers. What a good en- 
vironment does is to make the dray horses stronger 
dray horses, and to make them become the pro- 
genitors of a stronger race of dray horses. This 
is a truth upon which every man who is engaged 
in breeding acts daily. Our human problem is not 
to breed any one particular kind of men. We 
want all kinds of useful men, manual workers, 
skilled toilers, intellectual leaders. The improve- 
ment of environment gives us stronger and more 
vigorous men of all kinds. Among men and 
among animals we can, on every hand, see the 
results of an improved environment. It is shown 
in the statistics of the boys in schools, colleges, 
and universities, for the statistical examinations 
reveal a large and vigorous physique. It may be 
objected that there must have been a selective pro- 
cess among the parents, and this is a partial ex- 
planation; but more abundant food and more 
sanitary surroundings all have their effects. The 
more carefully one examines into the statistical 
data, the more strongly, it is believed, will one lay 
emphasis upon the importance of a good environ- 
ment, giving us a larger number of strong and vig- 
orous survivals. 

There always will be some who are upon what 
we may call the ragged edge, those who just man- 
age to live whether the conditions of life are more 
or less strenuous. This has always been, and must 
necessarily always be, the case. But what is the 
condition of those who are away from this ragged 



edge? The improvements of which we have 
spoken give them an improved physical outlook, 
and will lead to a better reproduction. If we think 
in the concrete and bring before our minds illus- 
trations taken from our own experience, this will 
become clear. A gentleman, for years connected 
with one of the greatest hospitals in the country, 
tells the writer that long-continued illness in a fam- 
ily will at times reduce the whole family to the 
parasitical class. The family funds will become 
exhausted, the struggle to maintain a position 
among the self-supporting and self-respecting pop- 
ulation will gradually be abandoned, and the whole 
family will sink to a lower plane. There begins a 
degradation which there is every reason to fear 
will continue into future generations.^ 

We have not only the physical heredity, but, 

1 The late Colonel Waring of New York City, who transformed 
the street-cleaning service of that city, in speaking about the pre- 
vention of deaths by sanitary measures, says that every one of these 
abnormal deaths means " forty times as many serious and corrupt- 
ing illnesses." This is taken from Professor J. G. Brooks* recent 
work, " Social Unrest," p. 247. The statement by Colonel Waring 
could hardly be intended as a scientific estimate. Dr. Arthur 
Newsholme, in his " Vital Statistics," however, says that to the lives 
saved by improved sanitation we add " at least four times as many 
attacks of non-fatal diseases" (p. 151), and in speaking about the 
greater mortality of weakly children from infectious diseases in 
earlier times, he says : ** We personally think that the weeding out 
of weakly lives, caused by the greater mortality among weakly 
children suffering from an infectious disease, is almost entirely 
counterbalanced by the greater number of children made weakly 
in former times by non-fatal diseases" (p. 316; this, like the 
preceding quotation, is from the third edition). 


what has been so aptly termed by Professor J. 
Mark Baldwin, social heredity.^ This social hered- 
ity means the general social environment, the 
thoughts, the habits, the ways of looking at things, 
the mental self-assertion on the part of the sur- 
rounding individuals. Now the social heredity of 
those who are born in a family which has fallen 
' below the level of self-respect and self -maintenance 
is extremely bad. What does modem science and 
modem philanthropy do in cases of long-continued 
illness ? One thing which is attempted is to pro- 
vide for their proper treatment. Frequently they 
are obliged to leave hospitals before they are thor- 
oughly cured. To provide for complete recovery, 
convalescents* homes are being established in con- 
nection with hospitals. Scientific charity attempts 
to place upon their feet those who have suffered 
from disease or from temporary misfortune. 

But there are forces at work which must tend to 
improvements in the race due to selection. Never 
before since the days of Greece and Rome was 
more emphasis laid upon physical training, and 
never before was physical strength and prowess 
more highly esteemed. Even prize fighters are 
national heroes to whom the newspapers give up 
whole pages, where they give lines only to pure 
intellectual achievements. Athletic contests in our 
universities at times overshadow the intellectual 
work which we have heretofore supposed their 

^ In his " Social and Ethical Interpretations in Mental Develop- 



main purpose. No intellectual effort of a professor 
is heralded far and wide like the feats of a great 
athlete among the students. A true story brings 
out the attitude of the American boy. A lad in a 
preparatory school, visiting the University of Wis- 
consin, was quite excited when on the campus he 
met some one who was actually acquainted with the 
great football player, the punter, Pat O'Dea. The 
boy evidently felt himself honored to come as near 
the hero as this. Presently some one mentioned 
the president of the university. Dr. Adams, and he 
said, in a bewildered way, **Who is President 
Adams ? " 

Now along with this high esteem in which physi- 
cal superiority is held goes an increasing freedom 
of women in their choice of husbands. More and 
more civilization allows women to choose among 
the various classes. More and more do modern 
conditions give them a wide range of choice, and 
this leads to a preference for men with superiority 
of some sort. Mr. Wallace, who has been so fre- 
quently quoted, looks to the increasing freedom of 
women as a means whereby the race will be im- 
proved. Female choice, he says, will result in a 
better natural selection. Mr. Wallace thinks that 
when women become economically more inde- 
pendent — and they actually are becoming more 
independent economically — a considerable num- 
ber will feel not strongly inclined to marriage and 
will prefer to remain single rather than to take a 
husband who does not really satisfy them. On 

172 . 


the other hand, with improvements which reduce 
accidents in industry, the number of men who will 
survive will be increased, and the women who do 
care to marry will have a larger range of choice. 
This cannot be elaborated further in this place.^ 
It is interesting to notice that a woman who has 
written thoughtfully on " Women and Economics," 
Mrs. Charlotte Perkins Stetson,^ expects that the 
greater economic freedom of women will result in 
improved selection of husbands.^ 

Let us next take up the degenerate classes, and 
ask whether any effort is being made to prevent 
their reproduction. Little has as yet been done, 
but in civilized society the subject has never 
before attracted so much attention, and never 
before probably has there as much been done as 
now to prevent their reproduction, while there is 
every reason to beUeve that a great deal more 
is going to be done in the future. 

Criminals are confined for longer or shorter 
periods in jails or prisons, and they are, during 
this time, deprived of their opportunities for 
reproduction. The tendency of modern penology 
is to urge that criminals should be confined until 
thoroughly reformed, even if this results in life 
imprisonment. Those who are morally weak 

1 Vide " Studies, Scientific and Social," by Alfred Russel Wal- 
lace, Vol. I, p. 523, and especially Vol. II, pp. 507-508. 

* Now Mrs. Oilman. 

• " Women and Economics," by Charlotte Perkins Stetson, pp. 
92, no. III, et passim, 



should be placed where they cannot do any harm 
either directly themselves or indirectly through a 
degenerate posterity. 

Paupers and feeble-minded are being placed in 
custodial institutions of one sort or another, and 
they are being denied, to an increasing extent, 
opportunies to become the parents of a vicious 
progeny. This means much. 

Comparatively few people realize how strong is 
the quiet movement now going forward to regulate 
marriage, with a view to improve natural selection 
of those who are to continue the race. This 
movement can be traced back for at least forty 
years, and probably no one has been more worthily 
active in it than Mrs. Josephine Shaw Lowell, who, 
as member of various societies and organizations, 
has called attention to the conditions which have 
obtained in New York State. Investigations have 
been made from time to time during the past thirty 
years in New York, showing to how large an extent 
the most unfortunate classes in the community are 
the descendants of those who are physically, men- 
tally, and morally absolutely unfit. One of Mrs. 
Lowell's pamphlets, entitled "One Means of Pre- 
venting Pauperism," shows the shocking condition 
of things which has existed in New York State 
from the motherhood of pauper and feeble-minded 
women. In this report she says, referring to the 
Tenth Annual Report of the New York State 
Board of Charities, "Even a casual perusal of 
this report will convince the reader that one of 



the most important and most dangerous causes 
of the increase of crime, pauperism, and insanity 
is the unrestricted liberty allowed to vagrant and 
degraded women." ^ She then goes on to give 
the records of a few of the women found in 
various poorhouses of the state. The Legislature 
of New York State, in 1878, made provision for 
the establishment of a home for feeble-minded 
and idiotic pauper women. In 1880 this home 
contained one hundred inmates. The result proves 
to have been thoroughly satisfactory. It is said, in 
the Report of the State Board of Charities for 1880, 
that " the institution affords complete protection to 
its inmates and thoroughly trains them to industrial 
pursuits ; and as the cost of maintenance and care 
exceeds but little, if any, that of the poorhouses 
and almshouses for the same class, it can no longer 
be regarded as experimental. There are still con- 
siderable numbers of females of this class, in our 
poorhouses and almshouses, who are without the 
supervision and oversight adequate to their pro- 
tection, and we believe it would be wise economy 
for the state to extend its custodial accomodations 
so as to include these.*' 

The efforts begun in a feeble way have con- 
tinued, and more and more has been accomplished 
in New York State. The movement has also 
spread to other states, where homes for the feeble- 
minded have been established. As to the poor- 

* •* One Means of Preventing Pauperism," by Mrs. Josephine S. 
Lowell, p. 3. 


houses, we have reached a condition where at 
least the more intelligent portion of the commu- 
nity no longer consider it a joke when two pauper 
inmates are married. Doubtless we shall soon 
reach a time, as in older countries, when nothing 
of the sort will be tolerated. 

But the regulation of marriage, which is pro- 
posed, and which is being pushed forward by 
physicians and thoughtful people, — by people 
who are the farthest removed from any possible 
designation as cranks, — looks beyond the pre- 
vention of the marriage of paupers and feeble- 
minded. A literature on this subject is growing 
up, as yet confined chiefly to medical journals and 
reports of medical associations. There lies before 
the writer the text of a law passed by Michigan, 
which prohibits the marriage of persons having 
certain maladies.^ There also lie before him bills 
introduced in four legislatures, in 1901, to regulate 
marriage. These are the legislatures of Indiana, 
Ohio, Minnesota, and Wisconsin. The following 
is the full text of the Indiana bill of 1901, known 
as the Lindley Bill, from State Senator Thomas 
J. Lindley: — 

" Be it resolved by the General Assembly of the 
State of Indiana, That it shall be the duty of the 
Governor of the State of Indiana immediately upon 

^ Law of 1899, Section 6, "No insane person, idiot, or person 
who has been afflicted with syphilis or gonorrhoea, and has not been 
cured of the same, shall be capable of contracting marriage." 



the adjournment of the present session of the Gen- 
eral Assembly to appoint five persons, eminent in 
their respective professions or spheres, two of whom 
shall be physicians, and one of whom shall be a 
man learned in the law, and two of whom shall be 
women who have been married and are mothers. 

" It shall be the duty of the Commission to in- 
vestigate and inquire into the laws pertaining to 
marriage and divorce, the physiological and hy- 
gienic effect of marriage under certain conditions 
and circumstances upon the offspring and society, 
and what are the rights, powers, and obligations 
of the State in the premises. 

" It shall be the further duty of said Commission 
to make full report of their investigations, under 
the provisions of this resolution, and their conclu- 
sion reached, together with such recommendations 
relating thereto as to measures which may be 
adopted to remedy or mitigate evils now existing, 
which result in great domestic suffering and infe- 
licity, and entail great expense upon society and 
the State ; also to prepare and submit, as part of 
their report, a remedial bill for the consideration 
of the General Assembly of the State, which report 
and bill shall be submitted to the next regular ses- 
sion thereof, to be held in the city of Indianapolis 
in 1903. 

" It shall be the duty of all public officers or other 
persons to assist said Commission in acquiring the 
mformation desired by answering questions and 
exhibiting records, and in all other proper ways." 

N 177 


Senator Lindley made the following statement 
concerning this bill : " For a long time my atten- 
tion has been directed toward the necessity of hav- 
ing as much attention paid' to the breeding of 
human beings as was devoted to the breeding of 
stock. On my farms I use science on animals 
that are not suitable to breed from. I reserve the 
very best. If I did not, my stock would run out 
and I would go to the poorhouse. 

" There is complaint against the present divorce 
laws. Divorces are too common. Every one is 
allowed to mate and breed. Why not restrict 
those who are unsuitable to breed for the good of 
the human race.? 

" The Commission should provide for physical 
examination of all desiring to marry. This would 
include their racial tendencies, moral, mental, and 
physical condition, whether they are of sound 
mind, free from chronic deadly diseases, and not 
moral degenerates. If the several governments 
would devote a little attention to this subject for 
a few years, two generations would see a different; 
people on this earth. It is a radical but sound idea." 
This bill failed of passage, as did the other bills 
referred to. In the present session (1903) Senator 
Lindley introduced another bill, from which the fol- 
lowing is a quotation : — 

" Section I. Be it enacted by the General As- 
sembly of the State of Indiana, That it shall be 
unlawful for any clerk of the court, deputy clerk, 



or any other officer who may hereafter be author- 
ized to issue marriage licenses, after having re- 
ceived notice, to gr^t such licenses to persons, 
either one of whom shall be at the time of mak- 
ing application therefor confined in any jail, prison, 
or workhouse upon any criminal charge, or under 
bonds therefor; or to any couple, either one of 
whom shall be a pauper or public charge, the 
woman being under fifty years of age ; or to any 
person afflicted or supposed to be afflicted with 
epilepsy, tuberculosis, or syphilis, unless such per- 
son shall procure from a local health officer of the 
State, county, municipality, or town in which such 
applicant resides, a sworn statement in writing that 
such applicant is not afflicted with such disease." 

This bill, after passing the Senate, failed in the 
House, as did the bill in 1901. The first bill, 
however, is really preferable, in order that legisla- 
tive action may be preceded by ample and scientific 
inquiry. This movement is, as already intimated, 
but in its infancy. But, with the kind of people 
who are pushing it forward, there is every promise 
that it is going to attain great prominence. The 
results will be, in time, a considerable degree of 
elimination of the most unfit for parentage.^ This 

1 In this connection it should be observed that the last Congress 
by an act approved March 3, 1903, has provided for the exclusion 
from our immigrants of the most unfit classes. This act should be 
viewed as simply one manifestation of a growing desire and de- 
termination on the part of the people of the United States to raise 
the quality of our population. The following is a quotation from the 



itself, as an advance beyond what the world has 
seen heretofore, means much. It is also entirely 
in line with what is desired in accordance with Mr. 
Wallace's statement: "What we want is not a 
higher standard of perfection in the future, but a 
higher average, and this can best be produced by 
the elimination of the lowest of all, and the free 
intermingling of the rest/* ^ 

Apart from legislative effort, private action must 
be affected by enlightenment, and an improved 
sentiment concerning marriage, with the result 
that, voluntarily at least, more of the physically 
unfit will refrain from marriage. 

It is, perhaps, not quite true that, apart from 
the really unfit in the community, we desire a free 

act just mentioned : " All idiots, insane persons, epileptics, and per- 
sons who have been insane within five years previous; persons who 
have had two or more attacks of insanity at any time previously; 
paupers; persons likely to become a public charge; professional 
beggars; persons afflicted with a loathsome or with a dangerous con- 
tagious disease ; persons who have been convicted of a felony, or 
other crime or misdemeanor involving moral turpitude; polygamists, 
anarchists, or persons who believe in or advocate the overthrow by 
force or violence of the Government of the United States, or of all 
government, or of all forms of law, or the assassination of public of- 
ficials; prostitutes, and persons who procure or attempt to bring in 
prostitutes or women for the purpose of prostitution; those who have 
been, within one year from the date of the application for admission 
to the United States, deported as being under offers, solicitations, 
promises or agreements to perform labor or service of some kind 
therein; and also any person whose ticket or passage is paid for 
with the money of another, or who is assisted by others to come, un- 
less it is affirmatively and satisfactorily shown that such person does 
not belong to one of the foregoing excluded classes." 
1 "Studies, Social and Scientific," Vol. I, p. 525. 


intermingling of all the rest of the population. 
We desire our racers, as well as our draught horses, 
but natural and sexual selection seem to be quite 
able to take care of this matter. We do have a 
great deal of selection going on. Like marry 
like, the old adage to the contrary notwithstand- 
ing, and we shall have intellectually and spiritually 
superior families in the future quite as much as in 
the past. 

We have much to learn as to who are the fit 
physically and mentally, and as to the measures to 
secure the best reproduction. What is here stated 
must be regarded as only suggestions, which, it is 
hoped, will be followed up by others, and upon 
which the writer will be glad himself to do further 
work, if leisure therefor can be found. The writer 
can in this place only describe such thoughts and 
observations as have convinced him that never 
before has there been a higher degree of vigor 
in modern nations, and never before have more 
promising efforts been made to maintain, and even 
to increase, man's physical powers and economic 


The literature of this subject is so vast, is found 
in so many books and magazines, is quite largely 
so difficult and technical, and is also, for the pur- 
poses of the present chapter, for the most part, so 
unsatisfactory, that the attempt to give references 
is at the outset discouraging. It would be possible 



to write an entire book upon the literature, but it is 
not easy to mention comparatively few works which 
will prove helpful to the ordinary reader. Never- 
theless, several titles are given below. Should there 
be those desiring to carry the study farther, the 
publications mentioned will put them in the way 
of still further sources of information. 

Billings, J. S., The Diminishing Birth-rate in the United 
States. The Forum, June, 1893. 

Brownell, J. L., The Significance of the Decreasing Birth 
Rate. Annals of the American Academy of Political and 
Social Science, July, 1894, Vol. V. 

Bryce, James, Relations of the Advanced and Back- 
ward Races of Mankind. Romanes Lecture. Oxford, 

Dictionary of Philosophy. J. Mark Baldwin, editor. New 
York, 1903. Consult articles dealing with authors and 
topics mentioned in this chapter. 

Edson, Cyrus, American Life and Physical Deterioration. 
North American Review, October, 1893. 

Fetter, Frank A., Social Progress and Race Degeneration. 
The Forum, October, 1899. 

Galton, Francis, Hereditary Genius. New York, 1871. 

GiDDiNGS, Franklin H., Principles of Sociology. New York, 
1896. Bk. Ill, The Historical Evolution of Society. Bk. 
IV, Social Process, Law and Cause. 

Jordan, David Starr, The Blood of the Nation. Boston, 
1902. Emphasizes (and perhaps too strongly) the in- 
fluence of war in removing many of the stronger men and 
thus leading to race deterioration. The modern railway, 
at l^ast in the United States, injures and destroys more 
men than modern war. Those who have access to the 
Army and Navy Journal will do well to read in this con- 
nection an article which appeared in the issue for July 
21, 1900, entitled "The Hell of Railroading" — taken of 


course from the familiar statement that "war is hell." 
It is very well that Dr. Jordan has called attention to the 
significance of war in race deterioration, but a full scien- 
tific account of the forces at work in determining the 
character of the race must take note also of industrial 
accidents which kill so many more men. Nor can it in a 
scientific inquiry be assumed, without careful investiga- 
tion, that the men who are destroyed by industry, espe- 
cially the railways, are less valuable considered as fathers 
than the men who are destroyed by war. These remarks 
are pertinent as calling attention to the scientific aspects 
of the case. Practical philanthropy will lead us to in- 
quire whether or not in the case of war we may avoid 
this loss, and whether or not in the case of industry we 
can afford the expenditure which would prevent bodily 
injuries and the loss of life ; since by far the larger pro- 
portion of accidents to employees, especially to those of 
railways, are preventable. 

^UCZYNSKI, R. R., The Fecundity of the Native and Foreign- 
born Population in Massachusetts. Quarterly Journal 
of Economics, November, 1901, and February, 1902. 
Vol. XVI. 

^Iewsholme, Arthur, The Elements of Vital Statistics. 
3d ed., "almost entirely rewritten." London and New 
York, 1899. In the discussion of Social Progress and 
Race Improvement, Ch. XV on The Influence of Climate 
and Social Conditions on Mortality, and Ch. XXVI on 
The Decline in the English Death Rate and its Causes 
are especially valuable. But the whole work may be 
recommended since a knowledge of vital statistics, " the 
science of numbers applied to the life history of com- 
munities and nations," will be an aid to the serious 
student in avoiding many pitfalls in the discussion of this 
complicated subject. 

^ACKARD, A. S., Lamarck, the Founder of Evolution. New 
York, 190 1. The last chapter is a statement of the prin- 
ciples of Neo-Lamarckism. 



Pearson, Karl, Chances of Death, and other Essays in 
Evolution. London and New York, 1897. 

Pearson, Karl, A Grammar of Science. 2d ed. London, 
1900. Ch. IX, Life; Ch. X, Evolution (Variation and 
Selection) ; Ch. XI, Evolution (Reproduction and In- 

Ritchie, D. G., Darwin and Hegel. London and New York, 
1893. Ch. I, note on Heredity as a Factor in Knowl- 
edge. Ch. II, Darwin and Hegel. As the title indi- 
cates, this is an examin^ion of the scientific relation 
between the two great leaders of thought named, and also 
an inquiry into the biological controversy between the 
Lamarckian and Weismannite. Ritchie is critical and 
always thought-provoking. 
Darwinism and Politics. 2d ed. London, 1891. 

Rowntree, B. Seebohm, Poverty : a Study of Town Life. 
3d ed. New York, 1902. Especially Ch. VII, The Re- 
lation of Poverty to the Study of Town Life. 

Ward, Lester F., Outlines of Sociology. New York, 1898. 
Ch. XI, Individual Telesis ; Ch. XII, Collective Telesis. 
Psychic Factors of Civilization. Ch. XXXVIII, Soci- 
ocracy, and Ch. XXXIV, Meliorism. 

Pure Sociology. New York, 1903. It is difficult to 
make a selection of chapters, but perhaps Ch. XI, Social 
Dynamics; Ch. XIX, Conquests of Nature; and Ch. 
XX, Socialization of Achievement, may be specially 

Weismann, August, Essays in Heredity. 2 vols. Oxford, 

Wells, H. G., Mankind in the Making. Cosmopolitan Maga- 
zine, November, 1902. 

Human Evolution an Artificial Process. Fortnightly 
Review, Vol. LX. 





For the following brief account of the establishment of 
institutions for feeble-minded in this country, the present 
writer is indebted to Dr. A. W. Wilmarth, Superintendent of 
the Wisconsin Home for Feeble-minded at Chippewa Falls. 

"In Massachusetts, January 22, 1846, a committee of the 
House of Representatives were ordered to consider the ex- 
pediency of appointing commissioners to inquire into the con- 
dition of idiots in the commonwealth," to ascertain their 
number, and whether anything could be done for their relief. 
On the report of this commission, the legislature appropriated 
$2500 for an experimental school. 

" In New York, in the same year, a bill was introduced into 
the Senate, but failed in the Assembly. This was repeated in 
1849, ^^S^f ^85^? when the first legislation was effected by the 
passage of an act entitled ' An Act to establish an Asylum 
for Idiots and making an appropriation therefor.' 

"In 1848 a private school was opened at Barre, Mass., 
which is still in successful operation. 

" The first legislation in Pennsylvania was that which estab- 
lished, on April 7, 1853, the Pennsylvania Training School at 

"April 17, 1857, the Ohio legislature passed a bill creating 
the Ohio Institution for Feeble-minded. 

" The Board of Commissioners, whose investigation led to 
the establishment of the Connecticut School for Feeble- 
minded was appointed in 1855. 

"Kentucky granted the charter for the Kentucky Institu- 
tion February 11, i860. 

" Illinois started an experimental school for the teaching of 
these children as an adjunct of the Deaf Mute Institution at 
Jacksonville, shortly after Kentucky had taken action. 



" Institutions were organized in Iowa in 1876, in Minnesota 
in 1879, i^ Indiana in the same year. 

"The Kansas Institution was established in 1 88 1, that of 
California in 1883, and that of Nebraska in 1887. 

"Maryland purchased a site for its institution in 1888. 
New Jersey started with two institutions about the same time. 

"Washington opened separate accommodations for the 
feeble-minded in 1891. 

"Michigan began operations in 1895. 

" The legislature of Wisconsin made an appropriation for 
the erection of buildings in that state in 1895, though the 
buildings were not occupied until early in 1897. 

" Pennsylvania opened a second institution in the western 
part of the state the same year. North Dakota is opening 
an institution at Grafton. In Colorado, New Hampshire, and 
Maine, active work is being done towards organizing this work 
in those states." 

In another letter Dr. Wilmarth calls attention, in the follow- 
ing language, to another important consideration : — 

"There is one passage in your article that attracted my 
attention especially : * But with all its mildness, civilization 
lessens unfit reproduction, and on the whole does so to an 
ever increasing extent,' etc. I think that is liable to be more 
true in the future than it has been in the past. It has, indeed, 
put the feeble-minded in asylums, where it has educated some 
of them to an extent that they are able to go out, earn some 
kind of a living, naturally marry some one of about their own 
grade of intelligence, and, sad to say, in some cases produce 
a large family of defectives. It places the insane in hospitals, 
allows them to return to their families even before recovering, 
and invariably so as soon as such symptoms have passed as 
would make them a menace to the community. 

"I see in the Report of the Conference of Charities in 
Topeka, that Hon. J. D. Alexander states : * We have in the 
Institution for the Feeble-minded (in Ohio) eleven imbeciles 
that are the children of a person taken into that institution 
thirty years ago, and then allowed to go out to bring back a 



brood of imbeciles.' The authorities in this state have wisely 
taken the ground that imbecile girls committed to our care 
should stay with us until the age of forty-five, unless we are 
assured that they are going into perfectly safe care. When we 
can check the flood of degeneracy from this source, we shall not 
only have the advance which you describe, but we shall check 
in large measure the current flowing in the opposite direction. 
I think the state should pass laws sufficiently strong to curb 
indiscriminate marriage, and yet not so radical as to make 
them inoperative. I know of no better law yet framed than 
that in Connecticut, which punishes any one marrying an 
insane, feeble-minded, or epileptic person, and imposes a pen- 
alty on any one who aids or abets such a marriage/' 



§ 1354. Marriage of Epileptics and Imbeciles, — Every 
man and woman, either of whom is epileptic, imbecile, or 
feeble-minded, who shall intermarry, or live together as hus- 
band and wife, when the woman is under forty-five years of 
age, shall be imprisoned not more than three years. But 
nothing herein contained shall be construed as affecting the 
mutual relations of any man and woman lawfiilly married on 
or before the thirty-first of July, 1895. — 1895, Chs. 325, 350. 

§ 1355. Procuring or aiding stick Marriage, — Every per- 
son who shall advise, aid, abet, cause, or assist in procuring 
the marriage of the persons described in § 1354, knowing 
them or either of them to be epileptic, imbecile, or feeble- 
minded, shall be fined not more than one thousand dollars, or 
imprisoned not more than five years, or both. — 1895, Ch. 325. 

§ 1356. Penalty for Carnal Knowledge in Certain Cases. — 
Every man who shall carnally know any female under the age 
of forty-five years who is epileptic, imbecile, feeble-minded, 

1 From Revised Statutes of Connecticut, 1902. 



or a pauper, shall be imprisoned not more than three years. 
Every man, who is epileptic, who shall carnally know any 
female under the age of forty-five years, and every female 
under the age of forty-five years who shall consent to be 
carnally known by any man who is epileptic, imbecile, or 
feeble-minded, shall be imprisoned not more than three 
years. — 1895, Ch. 325. 

§ 1357. Joining Persons in Marriage without Authority: — 
Whoever undertakes to join persons in marriage, knowing 
that he is not authorized so to do, shall be fined not more 
than five hundred dollars, or imprisoned not more than one 
year, or both. — 1865, Rev. 1888, § 1561. 




I. General Statement of the Problem 

First of all, it is essential that we should have 
a clear idea of monopoly as a starting-point. To 
use the language of the philosopher Locke, the 
word " monopoly " is a sign standing for an idea. 
What is that idea } Unless we know exactly what 
it is that we are talking about when we are dis- 
cussing monopoly our own thought will be confused, 
and the confusion will be- multiplied many fold 
when the discussion becomes general. There can 
be no doubt that in economic literature, as well as 
in the periodical press, this one word-sign, monopoly, 
has been made to stand for many different and 
more or less antagonistic ideas, and as a conse- 
quence the controversies in which we have been 
engaged concerning monopoly have produced com- 
paratively little action and even less light. Un- 
doubtedly the economists are quite largely 
responsible for the confusion of thought which 
has been introduced into the discussion of monopoly, 
for, extending the term to cover related but quite 
different economic concepts, they have departed 



from the best usage of the English language. 
The courts in their decisions have not gotten so 
far away from the correct use of language, but 
their decisions also show confusion of thought, 
due to the fact that they have frequently attempted 
to introduce ideas appropriate to the seventeenth 
century into recent decisions without that modifi- 
cation which the mighty industrial evolution of 
three centuries has necessitated. 

To what do we oppose most sharply the word 
" monopoly " in our thought ? The answer at once 
given is competition. Monopoly is the opposite 
of competition. Competition means, among other 
things, rivalry in the offer of services or com- 
modities. When each one of two or more persons 
seeks to induce us to purchase of him, and not of 
others, services or commodities which he has for 
sale, we have a condition of competition. When- 
ever, on the contrary, we have only one seller, we 
have a condition of monopoly ; and we have only 
one seller when all those who have services or 
commodities of a particular kind for sale have so 
bound themselves together that they act as one 
man. What has been said with respect to sales 
would also hold true with respect to purchases. 
It is unity in some one kind of business which 
gives us monopoly. The following is then offered 
as a definition of monopoly which accords with 
good English usage: Monopoly means that sub- 
stantial tmity of action on the part of one or more 
persons engaged in some kind of business which 



gives exclusive control more particularly^ although 
not solely y zvith respect to price. 

It is not now possible to discuss this definition 
exhaustively.^ One or two things, however, must 
be said. What is essential is control of price. 
The other things which monopoly carries with it 
flow from such control and are not secure without 
it. In the second place, the fact must be empha- 
sized that absolute unity of action is not requisite. 
The essence of monopoly is substantial and control- 
ling unity of action, and this is given when a com- 
bination of men acting together as a unit have a 
dominating position over the sale of some one kind 
of commodity or service. Mr. Havemeyer, presi- 
dent of the American Sugar Refining Company, 
at one time said that a man producing eighty per 
cent of the product had such a position. The 
percentage, however, is a variable one. 

The definition of monopoly which is here given 
brings before us its social significance in several 
most important particulars. As it is the opposite 
of competition, so the protection which competition 
gives to society is removed by monopoly. The 
theory of competition is that we are protected 
against unreasonable demands by the rivalry exist- 
ing among competitors. The farmer who is tempted 
to ask an exorbitant price for his potatoes is held 
in check by his neighbors who have potatoes which 
they likewise desire to sell. The retail merchant 

^ The entire subject is discussed at far greater length in the 
author's work, ** Monopolies and Trusts.'' 



who places an excessive valuation upon his ser- 
vices finds that his rivals, more moderate in their 
demands, take away his customers from him. 
This is all simple enough, but it has a profound 
meaning which has made a deep impress upon 
English common law. Competition has been re- 
garded for ages as a corner-stone of our industrial 
order, while monoply has been held to be a menace 
to that order. The decisions of courts, both in our 
own country and England, proceed upon the hy- 
pothesis that competition is the palladium of our 
industrial liberties. It is true that competition is a 
comer-stone of our present social order. If com- 
petition is removed, something else must be put in 
place of it. It is because this truth has been so 
clearly grasped by socialism, and because socialism 
does propose to put something else in the place of 
competition, that the logical position of socialism 
has proved so strong. It is essential that we 
should clearly grasp the fact that we must have 
competition or something else in the place of it. 
If this is so, the popular apprehension in regard to 
the growth of monoply does not exaggerate its sig- 
nificance, however confused and perplexed public 
opinion may be in other particulars. The next 
question which suggests itself naturally is this : To 
what extent does monopoly actually prevail ? Has 
competition been replaced to such an extent that 
the competitive order has been seriously disturbed ? 
If we cannot give a precise and definite answer to 
the first question, there can be no doubt that the 



second question calls for a decided affirmation in 
reply. Appeal may be made to the familiar experi- 
ence of all. We continually run up against mo- 
nopoly in one way or another, and we feel that 
we lack the protection which full and free compe- 
tition would afford. It may be that we have to do 
practically with one employer wherever we seek 
work. It may be that in the sale of our product 
we encounter purchasers so allied that they act as 
one man. It may be that in our own purchases of 
services we feel ourselves powerless because we 
are pitted against vast combinations of interests 
which are completely unified. Probably there 
will be few adult readers of these words who have 
not felt themselves hurt and aggrieved by what 
they deemed the conscienceless action of mo- 
nopoly. We may, however, approach the subject 
more analytically and scientifically if we examine 
into the classification and causes of monopoly. 
This is essential if we are to think clearly on the 
subject of monopolies and trusts. One main reason 
why we have made so little practical and so com- 
paratively little scientific progress in the treatment 
of this subject is attributable to the failure to ana- 
lyze and classify very complex forces and phenom- 
ena, and the result has been that we have been 
dealing with things essentially different as if they 
were all one in kind. 

There are many different points of view from 
which we may regard monopolies, and conse- 
quently many different classifications. The follow- 
^ 193 


ing classification, based on causes of monopoly, 
is one which has proved especially helpful to the 
author in his own thought : — 

A. Social Monopolies. 

I. General Welfare Monopolies. 

1. Patents. 

2. Copyrights. 

3. Public Consumption Monopolies. 

4. Trade-marks. 

5. Fiscal Monopolies. 

II. Special Privilege Monopolies. 

1. Those based on Public Favoritism. 

2. Those based on Private Favoritism. 

B. Natural Monopolies. 

I. Those arising from a Limited Supply of 
Raw Material. 
II. Those arising from Properties Inherent in 

the Business. 
III. Those arising from Secrecy. 

This classification of monopolies brings before us, 
by the analysis which it presents, the wide sweep 
of monopoly in modern industrial society. The 
simple enumeration itself does that, even without 
explanation of the various classes and subclasses. 
A few words, however, about some of these classes 
are essential. 

A Social Monopoly is a monopoly which arises out 
of social arrangements and is a7t expression of the 
will of society as a whole, through government, or 



of a section of society strong enough to impose its 
will on society, A Natural Monopoly ^ on the other 
handy is a monopoly which rests back on natural 
arrangements as distinguished from social arrange- 

The term "natural" here is used in its well- 
understood and customary sense, to indicate some- 
thing external to man's mind. A natural monopoly 
is one which, so far from giving expression to the 
will of society, grows up apart from man's will and 
desire, as expressed socially, and frequently in di- 
rect opposition to his will and desire thus expressed. 

Public consumption monopolies are monopolies 
designed to regulate consumption beneficially, 
either to promote some desirable consumption, or 
to restrict and confine within limits deleterious and 
injurious consumption. The alcohol monopoly of 
Switzerland, the Japanese opium monopoly in For- 
mosa, and the South Carolina dispensary system 
afford illustrations. Fiscal monopolies are monopo- 
lies which are created primarily in the interest of the 
public treasury. The tobacco monopoly of France 
affords the best illustration. Monopolies based 
on public favoritism are monopolies which are 
due primarily to the action of public authority 
exerted in the interest of favorites. The old 
Tudor monopolies, against which protest was 
made so frequently in our early constitutions, 
afford abundant illustrations. Hume gives a vivid 
description of them in the reign of Elizabeth, in 
his "History of England.*' Private favoritism 



monopolies are businesses not naturally monopo- 
listic, which have become monopolies by virtue of 
an alliance with another monopoly, especially a 
natural monopoly, whereby they partake of the 
properties of the latter. Here special reference is 
made to the favoritism of railways, which has been 
so potent a cause of monopoly in the United 
States. This is well known, probably, to most 
people, and so far as the sceptical are concerned, 
it is in this place sufficient simply to refer to the 
reports of the Interstate Commerce Commission. 
The question may arise, however, why monopolies 
resting back on private favoritism are called social 
monopolies. It is true that they do not express 
the will of society as a whole ; on the other hand, 
they do give expression to the will of a social class 
strong enough to make its purposes prevail in 
society, and they are furthermore social because 
society is responsible for their existence, inasmuch 
as it is the function of society to prevent their 

Those monopolies arising from properties inher- 
ent in the business are those ordinarily designated 
as natural monopolies, although here they are pre- 
sented simply as one subclass under the general 
term. They are railways, telephones, gas-works, 
etc. We have two other classes of natural monop- 
olies. The first of these classes consists of monop- 
olies based upon a supply of raw material so limited 
that the sources of supply have been brought under 
unified control. Either one man has secured the 



sources of supply, or a combination of men who 
act together with substantial unity. Anthracite 
coal affords a familiar illustration. As time goes 
on it is not unlikely that other sources of supply 
will be monopolized. It is a question on the one 
hand of limitation of sources and the wealth which 
can be brought under unified control. The more 
limited the supply and the higher the degree of 
concentrated ownership of wealth, the easier will 
be the formation of this kind of monopoly. Secrecy 
is one cause of monopoly, and to this increasing 
importance is apparently attached by manufac- 
turers. It is placed under the head Natural 
Monopolies, because it is due to the private action 
of individuals and is not the expression of a con- 
scious purpose of society. 

It is hardly too much to say that the value of 
all monopolized businesses in the United States 
more probably exceeds a sixth of the entire val- 
uation of property in the United Stales than falls 
short of this proportion. 

If we have now a clear idea of what monopoly 
means, and of the extent to which it prevails, the 
next question which naturally suggests itself is 
this : What precisely is the power of monopoly ? 
The specific power of monopoly is that which 
arises from unified action on the part of monopo- 
lists. It is especially, although not exclusively, a 
power over price, and has been felicitously de- 
scribed by a German economist as unified tactics 
with respect to price. We should, however, in 



connection with our inquiries into the power of 
monopoly, give attention to the other things than 
the power to raise price which monopoly carries 
with it. This is especially important, inasmuch as 
almost exclusive attention has been directed to the 
power of monopoly to raise price. The one who 
is a monopolist, as he has exclusive control over 
his products, can, for that very reason, withhold 
supplies or services or furnish them irregularly. 
If we examine into the power of railways to help 
forward their favorites and to crush those whom 
they will, we must not think by any means merely 
of freight rates. If rates are uniform, while of two 
competitors one always receives cars when he wants 
them and the other has difficulty in securing cars 
for shipment, or if the freight of the one is forwarded 
promptly while the freight of the other is frequently 
sidetracked, this alone will sometimes be sufficient 
to build up the one and to ruin the other. We must 
also direct ®ur attention to everything connected 
with railway terminals, for in special advantages 
connected with these lies a large monopoly power, 
and in some cases these are alone a sufficient force 
to produce monopoly.^ An illustration is afforded 
by the transfer of passengers and baggage be- 
tween railway stations in many American cities. 
But in addition to the power to raise price, we 
must also take into account the power to lower 

1 In the case of the United States against the " Beef Trust," the 
government makes a special point of advantages of this kind as 
well as special freight rates. 



price, which is often equally effective. If, after I 
get in my supplies, you, my rival, order yours and 
secure transportation at lower rates, you have an 
advantage over me which may prove sufficient to 
enable you to drive me from business. How easy 
it is for those in a secret combination to aid 
one another with advance information concerning 
changes in monopolistic prices ! and frequently it 
will make no difference whether prices are to be 
raised or lowered.^ 

It is true, however, that what we have to con- 
sider principally in the case of monopoly is the 
high profits which the monopolist can secure. It 
is this excess of price especially which is of vital 
significance in the distribution of wealth. It has 
long been said that the monopolist charges that 
price which enables him to secure the highest net 
returns. The monopolist having control over sup- 
ply may in one way charge what price he pleases, 
as the courts so often state that he does. He must, 
however, charge a price which will enable him to 
dispose of his product He does have control over 
supply, but he does not have control over con- 
sumption. If people refuse to buy his services 
or commodity, he has no sales and no profits. He 

* The various monopolistic devices to bring other producers into 
harmonious action with monopolistic concerns are well called club- 
bing by Professor John B. Qark, in his " Control of Trusts " {e^. 
p. 59). Mr. George L. Bolen, in his " Plain Facts as to the Trusts 
and the Tariff," gives description of different methods of wielding 
the " monopoly club." Consult the references under that term in 
the Index of his book. 



must reduce prices until he has that combination 
of sales and profits on each sale which will give 
him the highest net returns. 

This is all more or less familiar ground, but there 
is something that is still more fundamental, and 
that the author has endeavored to formulate in a 
new law of monopoly price, which is as follows : 
Other things being equals the greater the intensity 
of customary use^ the higher the general average of 
economic well-beingy and the more readily wealth is 
expended^ the higher the monopoly charge which will 
yield the largest net returns} 

The significance of the intensity of customary 
use is something which cannot now be discussed, 
but it is desired to direct attention particularly to 
the other features of this law of monopoly price. 
The higher the general average of well-being, other 
things being equal, the higher the price which peo- 
ple will pay for commodities or services rather than 
go without them. Consequently this furnishes the 
monopolist with an opportunity for greater gains 
than those which could be reaped in a country with 
a lower average of well-being. Similarly, the more 
readily people spend money, the higher will be the 
price which will yield the largest net returns, be- 
cause the higher the price which people will pay 
for commodities or services rather than forego 
their enjoyment. We find these two conditions in 
high degree meeting together in the United States, 

1 This and other points are further elaborated in the author's 
•* Monopolies and Trusts." 



and this explains why it is that monopoly is among 
us so especially profitable. Probably there is no 
other country in the world in which monopoly, if let 
alone, yields such large returns as in our own coun- 
try. Again, there is no other country among the 
great civilized nations of the world in which mo- 
nopoly has been so let alone, so far as any real 
effective control is concerned, as it has been in 
the United States. We have, then, in the law of 
monopoly price a partial explanation of the vast 
concentration of wealth in the United States. We 
have abundant illustrations on every hand of the 
vast fortunes which monopolistic pursuits have 
yielded in our country, and we have an explana- 
tion of them which will, the writer believes, appeal 
to his readers and which, indeed, in his opinion, 
will grow upon them the more they think about 
it. We may take as an illustration street-car 
fares in our own country and in other countries. 
There is evidence going to show that the price for 
street-car service in our great American cities 
which yields the largest net returns to the street- 
car monopolist is five cents. Apart from all legis- 
lative control, it is not probable that in our great 
cities it is in the interest of the owners of street- 
car property to charge more than five cents. With 
our high average of well-being and our readiness in 
the expenditure of money, a five-cent fare reaches 
down into the masses of the people. Doubtless it 
is too high a fare for the lowest social strata, and 
yet it reaches so far down that probably the in- 


crease in traffic from a lower fare would not off- 
set the loss in profit on each passenger transported. 
Ill a country like Germany, on the other hand, a 
five-cent fare would probably be too high to yield 
the largest net return to the monopolist, inasmuch 
as, with the lower general average of economic 
well-being and the greater frugality, a fare so high 
would not reach down far enough into the masses 
of the people to induce a sufficiently large traffic 
to be most remunerative. The fare in Berlin for 
one of their zones is lo pfennige or 2.4 cents, and 
the writer is strongly inclined to think that that is 
the fare which yields the largest net returns. Our 
telephone service affords another illustration. It 
is safe to express the opinion that in a city like 
Berlin the charges for telephone service which 
large numbers pay in New York and Chicago 
would so reduce the use of the telephone that it 
would not be highly remunerative. 

Our discussion of monopolies has brought before 
us the evils of monopoly. It may be well to add, 
in further elucidation of these evils, a quotation 
from a leading British case known as the Case of 
Monopolies. It is the case of Darcy vs. AUein of 
1602. The court stated the evils of monopoly in 
these words : — 

" First. ' The price of the same commodity will be 
raised, for he who has the sole selling of any commodity 
may and will make the price as he pleases. . . . The second 
incident to a monopoly is that after the monopoly is 
granted the commodity is not so good and merchantable 



as it was before ; for the patentee, having the sole trade, 
regards only his private benefit, and not the common- 
wealth. Third. It tends to the impoverishment of 
divers artificers and others, who, before, by the labor of 
their hands in their art or trade, have maintained them- 
selves and their families, who now will of necessity be 
constrained to Uve in idleness and beggary.* " 

This exposition of evils has been very frequently 
indorsed by American courts, and one of these 
courts adds this comment upon the third ground 
mentioned: "The third objection, though fre- 
quently overlooked, is none the less important 
A society in which a few men are the employers 
and the great body are merely employees or ser- 
vants, fis not the most desirable in a republic; and 
it should be as much the policy of the laws to 
multiply the numbers engaged in independent pur- 
suits or in the profits of production as to cheapen 
the price to the consumer. Such policy would 
tend to an equality of fortunes among its citizens, 
thought to be so desirable in a republic, and lessen 
the amount of pauperism and crime." 

We have, then, on the one hand the oppression 
and tyranny which must flow from monopoly in a 
society composed of human beings, and on the 
other hand we have the inequalities in opportunity 
which discourage effort in two directions. Those 
who have these exclusive opportunities are not so 
alert and active as they would be otherwise, inas- 
much as they rely upon monopoly rather than 
upon excellence and energy in their economic 



efforts, while those who find themselves so handi- 
capped in the race for economic well-being are apt 
to become listless and indifferent as the result of 
discouragement. We are speaking now, not about 
what happens in the early days of monopoly, but 
what must happen in the long run as the result of 
well-k^own principles of human nature. We have, 
then, as a further outcome of the evils mentioned, 
a degree of concentration, of wealth which affords 
to some opportunities for indulgence of every whim 
and caprice, with wild extravagance as the result, 
while others lack the opportunities for a full and 
harmonious development of their faculties. With- 
out entering into this farther at present, it may be 
said that history furnishes abundant evidence of 
the pernicious social effects of wanton luxury con- 
fronted by poverty. Lecky's "History of Euro- 
pean Morals" gives a conservative statement of 
the ethical consequences of luxury. That great 
thinker, Aristotle, whose wise words still have 
deep meaning, may be consulted for a discussion 
of the difficulties of uniting wide extremes in the 
distribution of wealth with political democracy. 
Our courts do not at all exaggerate the dangers of 
monopoly, even if they do not always clearly see 
the direction in which remedies must be sought. 

This chapter is entitled ** Monopolies and 
Trusts,*' but thus far nothing has been said about 
trusts. The reason why nothing has been said 
about trusts is because, in the strict sense of the 
word, there is no such thing as a trust problem. 



Until we have this clearly in mind, we can make 
no progress in our discussion of monopolies and 
trusts. The trust in itself is no problem. But 
this must not be misunderstood. When men talk 
about trusts they are discussing real and vital 
problems, and analysis will show that, in so far 
as the discussion of the trust problem is an intelli- 
gent discussion, it resolves itself into three prob- 
lems : first of all, and chiefly, a monopoly problem ; 
secondly, a problem of concentration in production; 
and thirdly, a problem of wealth concentration, — 
quite a different thing from the problem of con- 
centration of production. Concentration of pro- 
duction means large-scale production. It means 
the great factory and the mammoth department 
store. Concentration of production has its own 
problems, but these may coexist with the keenest 
competition, as they usually do in both the cases just 
mentioned. Large-scale production, when it comes 
about as the result of the free play of economic 
forces, is justified by its efficiency. When it is 
able to maintain itself in a fair field without favors 
it gives a large return for expenditures of capital 
power and human labor power. It adds thus to 
the provision for human comfort, and should be 
no more antagonized than machinery should be. 
The real problem is to utilize it fully while reduc- 
ing to a minimum any evils incident to it. Many 
of the evils which large-scale production originally 
brought have already been mitigated by humane 
legislation which has regulated conditions of em- 



ployment. Reference is made especially to what 
is popularly known as factory legislation, which 
prohibits the employment of young children, and 
regulates beneficially sanitary conditions surround- 
ing wage-earners, and otherwise helps them to 
maintain wholesome conditions of life. Other evils 
which concentration of production has brought are 
those which investors have suffered on account of 
dishonest management of great enterprises, and 
for this relief must be sought in the improvement 
of our law governing private corporations. Some- 
thing more will be said about this remedy pres- 

II. Analysis of the Steel Trust 

Let us now consider these principles as applied 
to the greatest of all trusts, the United States 
Steel Corporation. Articles on this billion-dollar 
trust — or more accurately speaking, billion-and- 
a-half -dollar trust — have mostly regarded this new 
gigantic enterprise as a unit. It is a unit as a 
business undertaking, but on its economic side it 
is a unit which is made up of varied and complex 
parts and forces, and it cannot be understood as 
a manifestation of industrial evolution unless we 
analyze it. 

It is an undoubted fact that in this new trust 
we have one of the most startling phenomena in 
the economic history of mankind. It is quite 
natural that it should be spoken of as constituting 
the "World's Greatest Revolution," while another 



writer ^ is forced to compare the magnitude of the 
operations involved to the incomprehensible figures 
which greet us in astronomy, in order to give us 
some notion of the vastness of this new corpora- 
tion of corporations. Yet the thought occurs to 
us that we can measure astronomical forces. Can 
we not by analysis gain a clearer apprehension of 
the industrial forces which have met together 
and united in the United States Steel Corporation ? 
While in human affairs we may not expect to dis- 
cover the fine accuracy of astronomy, we cannot 
know how nearly we may approximate such exact- 
ness until we have tried. 

One of the first things revealed to us by analysis 
is that in the steel trust we do not encounter some- 
thing new in kind. The forces at work in this 
combination are old and familiar, and it is simply 
the degree in which they manifest themselves that 
is new. This becomes clear enough to us if we 
examine the kinds of industries which have been 
brought under unified management. What then 
are the kinds of industries which have been 
gathered together into this new trust ? 

Among the most prominent of these industries 
we find those engaged in mining operations. The 
appropriation of natural treasures, existing below 
the surface of the earth, is a chief feature in the 
projected work of the steel trust These treasures 
are all more or less sharply limited in supply, and 
in many cases the limitation is such as to make 

^ Mr. Charles S. Gleed, in Cosmopolitan Afagazine, May, 1901. 


monopoly easy. In the case of the rarer treasures, 
or m the case of treasures with comparatively few 
especially fine sources of supply, we have the condi- 
tions prepared for natural monopolies of one variety. 
This is a mere truism. Theory and practice have for 
hundreds of years distinguished between these natu- 
ral resources and other forms of property. The great 
legal systems of the world have for centuries rec- 
ognized, more or less clearly, this distinction. For 
over six hundred years on the continent of Europe 
the law has, generally speaking, placed in a cate- 
gory by themselves natural treasures, and in 1865 
Prussia passed a truly great mining law which 
established public property in the more important 
unappropriated mineral treasures in that kingdom, 
and did so to protect public interests. Even in 
this country where we are somewhat slow to rec- 
ognize public as opposed to private rights, this 
distinction is not unknown, and in fact, in an 
important case in Indiana, involving the waste of 
natural gas, property in this natural treasure was 
most sharply discriminated by the Supreme Court 
of that state from other forms of property. Among 
the theoretical writers who have recognized this 
distinction Professor Henry C. Adams may be 
mentioned, who has some instructive observations 
on this subject in his book on " Finance." 

Many manufacturing processes are included in 
the work of the steel trust, especially, of course, 
the manufacture of iron and steel. If space were 
not too limited, it would be worth while to quote 



in full from the charter the objects for which the 
United States Steel Corporation was formed. We 
note among these objects the following : " To 
apply for, obtain, register, purchase, lease, or 
otherwise to acquire, and to hold, use, operate, 
and introduce, and to sell, assign, or otherwise to 
dispose of, any trade-marks, trade names, patents, 
inventions, improvements, and processes/* Our 
analysis here reveals again the presence of monop- 
oly, and monopoly established of design by public 
authority in order to promote inventions and in- 
dustrial improvements. We have here to do with 
a union in one concern of the more important 
protected patents and processes in great classes 
of industries, and so far as these are concerned, 
we have clear-cut monopoly. 

Among the objects for which the corporation is 
formed we notice, furthermore, the following : ** To 
construct bridges, ships, boats, engines, cars, and 
other equipment, railroads, docks, slips, elevators, 
waterworks, gas-works, and electric works, via- 
ducts, canals, and other waterways, and any other 
means of transportation, and to sell the same, and 
otherwise to dispose thereof, or to maintain and 
operate the same." We have here again to do 
with industries of which the non-competitive char- 
acter has long been clearly recognized ; in other 
words, we once more find ourselves in the field of 
monopoly. Moreover, it has long been known that 
many other businesses, especially manufacturing 
businesses, stand in such dependent relations to 
p 209 


these non-competitive businesses that the latter can 
extend their monopolistic character to fields which 
otherwise would be competitive in nature. This is 
especially the case with transportation agencies, for, 
by special rates, they can easily build up favored 
businesses as monopolies. In fact, even unwittingly, 
favoritism may creep in and form monopoly. It is 
only through the most scrupulous impartiality like 
that of high-minded and disinterested judges, having 
ever in mind the danger of monopoly, that equality 
of opportunity for competitors can be maintained. 
Let us but reflect on the following as ways in 
which inequality of opportunity in transportation 
may arise ; (a) general facilities, as supplying cars 
to one competitor more promptly than to another ; 
{b) rushing through the freight of the favored 
shipper while that of another is sidetracked; (c) 
furnishing better terminal facilities to one per- 
son than to another; {d) maintenance of such 
relations between various modes of shipment — 
as for example, between tank-cars and barrels, 
and between rail, water, and pipe-line transporta- 
tion — that advantages come to some which oth- 
ers do not enjoy; (e) classifications of freight 
made and changed to the advantage of favored 
classes; (/) making discriminations in favor of 
geographical sections in tlie interest of classes of 

Unless in all the particulars named we maintain 
rigid impartiality like that of the clerk at the stamp- 
window of the post-office in selling stamps, it is 


hard to say where we shall find the limits of mo- 
nopoly fifty years from now. 

Is it conceivable that even excellent men, even 
those who in their expenditures show strongly 
marked philanthropic traits and tendencies, will of 
their own motion endeavor to maintain competi- 
tive equality of opportunity for themselves and for 
others ? We have a rapidly growing unification of 
coal-carrying and coal-mining interests. May we 
expect that the coal-carriers will in every particular 
treat independent producers as well as they do 
themselves in their capacity as coal-producers.^ 
Was it one of the purposes of this consolidation to 
maintain rigid impartiality, and thus competitive 
equality of opportunity ? If not, what then ? 

In casting about for an answer to these ques- 
tions, our attention is attracted by a certain gen- 
eral restlessness on the part of the public which 
has invaded even Wall Street. The consumers of 
the country believe that monopoly exists and is 
expanding rapidly, and it is their conviction, as 
well as that of our courts, that monopoly price 
must mean high price — that if now it means in 
some cases low price, this is a mere temporary 
arrangement. Other producers tremble when they 
contemplate a billion-dollar trust with which they 
must have relations. The wage-earner feels that, 
isolated and alone, he is a pygmy, a nothing, when 
his individual interests are pitted against amal- 
gamated hundreds of millions, and he is zealous 
in the formation of labor unions to prepare for 


conflict. When the citizen reflects on what is 
readily observable at our various seats of govern- 
ment, he feels that the potentialities of political 
power residing in a billion-dollar trust are vague, 
but certainly vast, perhaps illimitable. 

It may be said that we are here speaking about 
psychical states, but psychical states are dynamic 
forces of society. They deserve the most care- 
ful and candid consideration on the part of the 

The fact of tremendous power concentrated in 
the hands of the billion-dollar trust is clearly rec- 
ognized. We find in this billion-dollar trust three 
distinct kinds of monopolistic forces working to- 
gether and strengthening each other, viz., those 
proceeding from sharp limitations of supply of 
valuable minerals ; those proceeding from patents 
and secret processes; and finally those coming 
from transportation agencies and other similar 
monopolistic pursuits. We find thus what we 
may call monopoly raised to the third power. On 
the other hand, all sources of supply are not as 
yet embraced in this combination, and potentiali- 
ties of competition still exist here and there, but 
if untoward events do not beset the course of the 
billion-dollar steel trust, its monopolistic power is 
likely to increase. 

We then have to do with a union of men of 
very exceptional but probably not unique ability, 
who give economic direction to a considerable per- 
centage of the productive forces — including labor 



and capital — of the entire United States. Prop- 
erty in its nature means exclusive right of control, 
and these men have in their hands these exclusive 
rights. But our bread, our subsistence, comes 
from the operation of productive economic forces. 
Have those who draw this bread from these uni- 
fied productive forces a power which brings about 
that equilibrium which maintains interdependence 
and independence.'^ We remember what Shake- 
speare said about economic control: — 

" You take my house when you do take the prop 
That doth sustain my house ; you take my life 
When you do take the means whereby I live." 

While the fact of unprecedented power is 
admitted by our editorial writers, the hope is 
generally expressed that it will be used wisely, 
and sometimes dark hints are given as to what 
may follow if this power is misused. Our mag- 
nates have again and again been impressively told 
that the tremendousness of their power is almost 
appalling, and we are then reassured by grave 
utterances concerning the sobering effect of power. 
At bottom, protection is sought in the appeal to 
good will — to the benevolence of our industrial 
conquerors, our economic Alexanders and Caesars. 
What are the lessons of history ? Does past ex- 
perience teach us that we may place our hope for 
economic well-being wholly or in part in the 
benevolence of any class of men, even the most 
estimable? Or, turning to the deductive argu- 



ment, does our observation of human nature, even 
at the best, lead us to think this is a safe pro- 
cedure? When we question ourselves, do we 
think we could stand such a test? Noteworthy 
and impressive in this connection is the following 
utterance of the late Benjamin Harrison: "The 
man whose protection from wrong rests wholly 
upon the benevolence of another man or of a 
congress is a slave — a man ♦without rights." 

III. Remedies 

If we are not quite satisfied with appeals to 
benevolence, or even to an enlightened self-interest, 
that looks ahead and endeavors to avoid remote 
and long-delayed evils, we must pursue our quest 
for remedies farther. 

One of the first things to be asked is this: 
Admitting that appeals to individuals and exhorta- 
tion addressed to the great ones of the industrial 
world may produce gratifying individual action, is 
it possible that such individual action can produce 
a social system? There seems to be a growing 
conviction on the part of the general public that 
such is not the case ; and in this growing convic- 
tion is to be found the explanation of the gratifying 
fact that we are able to find no general inclination 
to blame the men who have played a leading r61e 
in the vast industrial combinations of the present 
time. The general public is awed, almost dazed, 
by the stupendousness of industrial events, but 



reproaches are not hurled against our economic 
kings. Mr. Tom L. Johnson, mayor of Cleveland, 
is reported to have said in Congress that as a 
private citizen he would take advantage of condi- 
tions favorable to monopoly, but that so far from 
aiding to pass laws calculated to build up monop- 
oly, he would do all in his power to defeat any 
proposals for new laws of this character, and would 
likewise exert himself to secure the repeal of exist- 
ing law calculated to promote monopoly. There 
is a general inclination to believe that this is a 
sound and thoroughly ethical course of action ; 
and one finds oneself wondering at times how 
many of our magnates are socialists at heart, work- 
ing out as best they can their theories. 

Our presentation of remedies must depend upon 
the kind of society in which we believe. Do we 
desire an essentially competitive order of society ? 
If so, we should remember that if competition is to 
be maintained permanently and to work smoothly, 
with absence of bitterness and industrial warfare, 
the number of competitors must be large. Farmers 
cannot combine into one monopolistic group be- 
cause there are too many of them, and for that 
same reason one farmer does not feel that personal 
blame attaches to his neighbor for the low price 
of wheat. This consideration of numbers is one 
important method of determining where we may 
and where we may not have competition. We see 
then one reason why in the case of the transporta- 
tion agencies, gas-works, and many other kinds of 



business, we must have monopoly, with an option 
only between public and private monopoly. 

Let us, then, in the fewest possible words, con- 
sider the nature of effective remedies for the evils 
of monopolies and trusts. First of all, we must 
not place the slightest confidence in any measures 
which forbid the growth of business or combina- 
tions on the part of persons engaged in business 
when they find it advantageous for them to enter 
into combinations. The so-called anti-trust legisla- 
tion of the American commonwealths has produced 
harm and can produce nothing but harm. So far 
from lessening the concentration of production, it 
has rather increased it. Looser forms of combina- 
tion in the face of anti-trust legislation have made 
way for closer and more effective unions. How 
these are to be prevented while the laws of private 
property are still maintained, is something which 
it is not easy to understand. Nor is it easy to see 
precisely what it is hoped will be accomplished by 
the sort of legislation which has been tried in so 
many of our states, and also by our federal govern- 
ment, with the possible exception of the federal 
legislation of 1903. It does not at all deal with 
causes, but touches only surface phenomena. We 
must go down far enough to reach underlying 
causes if we would accomplish any results. 

Among remedies, first of all mention must be 
made of education. General education should be 
so developed as to prepare every boy and girl 
for life. The same earnest attention should bQ 



given by our commonwealths to the education of 
our youth for civic life which Germany gives to 
the preparation of her young men for military 
life. If the best brains of the country were ear- 
nestly devoted to the preparation of our young 
people for civic life, and if money were as freely 
expended for this preparation as in Germany for 
the army, we should have wonderful results. We 
have a struggle for life. This it is not desirable to 
abolish. It is desirable to give for it the most 
thorough preparation. But in addition to general 
education a training in economics is needed which 
will lift to a higher plane our economic discussions 
and will render impossible the serious considera- 
tion which is so often given among us to quack 
remedies for economic evils. 

In the second place, we must take up earnestly 
the problem of natural monopolies. The time has 
gone by for a discussion of the question, Shall 
monopolies be publicly controlled or not.? The 
principle of control is accepted by every thinking 
person and is a well-recognized principle of juris- 
prudence in every civilized land. The question 
which has not been fully decided is this : Shall we 
have public control of private property interests in 
undertakings which fall under the head of natural 
monopolies, or shall social control be an outcome 
of public property with public management ? To 
put it more concretely : Shall we have private gas- 
works with a state gas commission to exercise 
control over them, as in Massachusetts, or shall 



we have municipal gas-works and allow social 
control to proceed naturally and spontaneously 
from municipal ownership and management ? 
Shall we maintain our private railways and at- 
tempt to control them through a further develop- 
ment of state railway commissions and the 
Interstate Commerce Commission, or shall we 
have public ownership with public operation ? We 
must take the one alternative or the other, and 
either one is beset with immense difficulties. In 
either case the ends to be achieved are similar, 
and there is not so much room for controversy 
concerning these ends as there is for controversy 
concerning the methods whereby they are to be 

We must bring it about that those who own 
and manage such businesses as gas-works, rail- 
ways, and the like, — that is, if we are to retain 
private property in these enterprises, — have no 
advantage over those engaged in other kinds of 
business. We must have no privileged classes 
composed of monopolists. We must not think 
that in the abolition of politically privileged classes 
we have accomplished the abolition of special 

Economic privileges are of greater significance 
than political privileges, and. we may have privi- 
leged classes although they do not go by the 
name of duke and lord ; they may be simply mag- 
nates and kings, as gas magnates and railway 
kings. Through social control property and en- 



terprise invested in monopolistic businesses must 
be placed on the same footing with property and 
enterprise invested in competitive businesses. It 
is idle to claim that such is the case now, when 
franchises for which no one has toiled in any hon- 
orable and legitimate way yield to their owners 
millions upon millions of dollars of unearned wealth. 

In the next place, it must be brought about that 
those who have dealings with monopolistic enter- 
prises are fairly and impartially treated. Tyranny 
and oppression, whether directed against the gen- 
eral public or employees, must be abolished. War 
must be waged upon monopolies founded on pri- 
vate favoritism until they become a thing of the 
past. They must take their place in history 
alongside of monopolies granted by Tudor kings 
to their favorites. 

The third class of remedies is found in the regu- 
lation of the transmission of property from genera- 
tion to generation, and this must be brought about 
in part by taxation, in part by laws which aim 
otherwise to secure a wide diffusion of wealth. 
This subject will be considered more fully in the 
chapter devoted to the inheritance of property.^ 

Tariff reform is mentioned as a fourth remedy, 
although the present author attaches far less im- 
portance to it than many others do. Wherever 
monopoly clearly rests upon the tariff, however, he 
is prepared to indorse a reform of the tariff. 

The fifth measure of reform which is recom- 
1 Pt II, Ch. VIL 


mended is the reform of the patent law. Not an 
abolition, be it understood, but such a reform along 
well approved lines as will render patents of less 
significance as a foundation of monopolies. It is 
quite practicable to accomplish this end and still 
maintain a patent system which will afford as great 
a stimulus to invention as does our present patent 
law. There are many different ways of encourag- 
ing and rewarding invention outside our patent 
system, but the most conservative proposition for 
meeting the situation is that of a former Commis- 
sioner of Patents, who would have the government 
reserve the right to purchase patents and throw 
them open to public use. In this connection, it is 
well to call attention to an impressive occurrence 
which took place two years ago in Madison, 
Wisconsin, when the legislature of that state pre- 
sented a medal to Professor S. M. Babcock, of the 
State University, on account of his valuable inven- 
tions, especially the "Babcock milk test,*' worth 
millions annually to the farmers of this country, 
which he had refused to have patented, because 
he felt that as a public servant he ought to give 
the general public the benefits of his inventions. 
The sixth line of reform is one which is still 
more important, and that is the reform of the law 
of private corporations. As cooperation takes 
place so largely through private corporations, 
which afford to persons of the smallest means 
opportunities for participation in the largest enter- 
prises, there is no ground for sympathy with any 



proposal to abolish or limit private corporations. 
What is desired is to bring them under eflfective 
public control, in order to secure honesty and pro- 
mote individual responsibility. Several things are 
needed to accomplish this purpose. One is com- 
plete publicity, with such extension of the criminal 
law as would send to the penitentiary as quickly 
the man guilty of theft through the medium of a 
corporation as the man guilty of theft in his indi- 
vidual capacity. We need, for effective control,, 
bureaus of corporations in our states, as well as 
an interstate bureau of corporations, such as that 
which has been established in connection with the 
new federal Department of Commerce and Labor. 
As a model for the general law of incorporation, 
the national banking act is recommended, although 
it is recognized that to adapt this to manufacturing 
and commercial purposes a few minor changes are 
necessary. One special purpose of this reform of 
private corporations is to protect the investor and 
increase the number of investors and thus promote 
a wide diffusion of property. Private corporations 
own a very large proportion of the wealth of the 
country, and if their management is of such a 
nature that the ordinary man can neither under- 
stand nor trust it, the consequence must be to con- 
fine the corporate ownership of property with its 
advantages to relatively few people, and the fur- 
ther consequence of this condition must be the 
encouragement of socialism, which means the 
abandonment of the effort to secure diffused 


prosperity through private property in productive 

Public opinion has during the past two or three 
years made gratifying progress in its attitude 
toward monopolies and trusts. At no time during 
the past twenty years has there been less blind 
denunciation of mere combination and large-scale 
industry ; at no previous time during this period 
has it been so clearly seen by so many people that 
the real evil against which we must contend is 
monopoly. Finally, never before in the United 
States have we had such intelligent legislation on 
the subject of monopolies and trusts as that en- 
acted in 1903 by Congress. Direct opposition to 
combinations has been at least partially abandoned, 
and an effort is now to be made to exercise control 
over monopolistic undertakings, with the end of 
doing away with private favoritism as a basis of 
monopoly. Congress has adopted in its legislation 
the view, expressed by Attorney-General Knox, 
that monopoly is the evil against which we contend 
and that monopoly rests upon special privileges 
which may be abolished so as thereby to bring us 
nearer the goal of equality of opportunities. It 
remains to be seen whether or not the remedies 
proposed are adequate ; especially whether or not 
it is possible to control effectively the gigantic 
corporations which rest upon a basis of natural 
monopoly. In the meantime we are gathering 
experience which will give us more light on the 
problems presented by monopolies and trusts. 


Of many references which could be given, a few 
books only will be mentioned. 

Baker, Chas. Whiting, Monopolies and the People. 3d ed. 
New York, 1899. An interesting work in which the author 
attempts to formulate the laws of competition. 

BoLEN, George L., The Plain Facts as to the Trusts and the 
Tariff. New York, 1903. This is a popular work, giving 
much valuable information. Quotations from many dif- 
ferent sources, presenting a variety of opinions, constitute 
a special feature of the book. 

Chicago Conference on Trusts. Chicago, 1900. This gives 
the proceedings of the most important gathering as yet 
held for the discussion of trusts. The Conference was 
held in Chicago September, 1899. It presents the views 
of many leading thinkers upon the subject, and gives a 
general survey of the field which is not easily found 

Clark, John B., The Control of Trusts. New York, 1902. 
The idea of Professor Clark is that the only dangerous 
element in the trusts is the power of monopoly, and that 
this can be removed or regulated. 

Ely, Richard T., Monopolies and Trusts. New York, 1900. 
The distinctive feature of this book is the attention given 
to the theory of monopoly, the author holding that the 
combinations called trusts cannot profitably be discussed 
until monopoly is correctly defined and its significance 

GuNTON, George, Trusts and the Public. New York, 1899. 
A presentation of the subject from the point of view 
friendly to the trusts. The author, however, makes a 
distinction between good trusts and bad trusts, and is by 
no means an indiscriminate advocate. 

Jenks, J. W., The Trust Problem. New York, 1900. The 
author favors the control of trusts, and presents in this 


little book a great deal of information which he gathered 
while serving as the expert agent of the United States 
Industrial Commission and as consulting expert of the 
United States Department of Labor. 

Lloyd, Henry D., Wealth against Commonwealth. New 
York, 1894. An arraignment of the Standard Oil Trust. 

Macrosty, Henry W., Trusts and the State. A Sketch of 
Competition. London, 1901. The author of this book 
is a Fabian socialist, and like the socialists in general 
fails to distinguish adequately between what is simply 
large-scale production and monopolistic production. The 
socialist finds monopoly everywhere, and thinks it is only 
a matter of time when every branch of production will be 
fully monopolized. This view colors the treatment of 
trusts by socialists. The present work, however, is one 
which, notwithstanding these defects, is worthy of careful 
study, especially on account of the information which it 
gives concerning English industry. 

Nettleton, a. B., Trusts or Competition. Chicago, 1900. 
Quotations are given presenting both sides of the question. 

United States Industrial Commission, Report of. Washing- 
ton, 1900. Vol. I, Trusts and Industrial Combinations. 
Vol. II, Trusts and Corporation Laws. Vol. XIII, In- 
dustrial Combinations. Vol. XIX, Miscellaneous (giving 
a review of the treatment in the earlier volumes). This 
gives the results of the most important investigation of 
the subject as yet made under the direction of public 




I. Municipal Ownership of Natural Monopolies 

The question under discussion relates to the 
ownership and management of those local busi- 
nesses which furnish what are called public utili- 
ties. The principal classes of these public utilities 
are water, light, and transportation. They are 
called monopolies because, as we know from ex- 
perience, we cannot have in their case effective 
and permanent competition. 

It is often said that we do not want to decide 
the question of municipal ownership in accordance 
with general principles, but that each case should 
be decided as it arises. If New York City desires 
public ownership of waterworks, it is urged, let 
New York City by all means try the experiment ; 
but let New Haven, if the people of that city so 
desire, continue private ownership of waterworks. 
Still others say, let us adhere to private owner- 
ship until we find that we have made a serious 

Q 225 


mistake in so doing. Both these attitudes imply 
the renunciation of science, or a denial of the 
possibility of a scientific solution of the problem. 
Imagine such an attitude in engineering as ap- 
plied, let us say, to bridge-building. The result 
would surely be disaster. The outcome of this 
attitude in what we may call applied economics 
or social engineering has likewise been disastrous. 
Mistakes have been made which it has not been 
possible to correct, or which have been corrected 
with gf-eat loss. The private ownership of water- 
works in London, which still persists, although 
recognized to be an evil many years ago, affords 
an illustration. If at length this evil is corrected, 
it will cost the taxpayers many millions of dollars 
which might have been saved. Innumerable illus- 
trations could be afforded, did space permit. What 
must be desired by any one who has an apprecia- 
tion of the nature of modern science, is the estab- 
lishment of general principles whereby mistakes 
may be avoided and loss prevented. The practical 
man will naturally take into account the actual, 
concrete condition in his application of general 
principles. The social engineer must, in this 
particular, follow the practice of the mechanical 

When we approach the question of public owner- 
ship versus private ownership of great industries as 
those connected with artificial light and transporta- 
tion, our attention is attracted by the municipal 
corruption which exists, particularly in our own 


country. The fact of this municipal corruption, 
and also the further fact of the very general incom- 
petency in the management of municipal affairs, 
are not called in question, and they are not under 
discussion. The corruption and incompetency may 
not everywhere be so bad as many pessimists im- 
agine, and it may, furthermore, be true that, in both 
respects, we have in many cities witnessed gratify- 
ing improvement. Yet when we have made these 
admissions, the true state of the case is bad enough. 
The civic conscience with us is slow of development. 
The satisfactory performance of public duties im- 
plies, in some particulars, a higher civilization than 
we have reached. It requires some development 
of the imagination to see the harm and suffering 
brcwght to countless individuals by lapses in civic 
virtue. Furthermore, it implies a higher develop- 
ment of conscience than that now generally found 
among us, to reach that state in which there is a 
conscious desire to abstain from all acts which may 
hurt people who are not seen. Many a man will 
give to a poor widow, whom he sees, money to re- 
lieve her distress, but, at the same time, will not 
hesitate to increase the burdens of poor widows 
whom he does not see, by fraudulent evasion of 

The men now in our municipal councils are 
not the kind of men to whom we would gladly 
turn over vast business interests. The very 

* The slow development of social ethics is admirably described 
in " Democracy and Social Ethics," by Jane Addams. 



thought repels us. Whether or not they are mor- 
ally better or worse than the men who in many 
cases are said to corrupt them, and who now exer- 
cise an important influence in the management of 
privately owned public utilities, it is freely conceded 
that they are less fit for the conduct of important 
businesses. We want street railways managed by 
men who understand the street railway business, 
gas-works managed by men who imderstand the 
gas business, and neither class of enterprises man- 
aged by men whose gifts are most conspicuous in 
the partisan manipulation of ward politics. It is 
important that it should be understood that the 
advocates of municipal ownership do not call in 
question the fact of municipal corruption and in- 
efficiency in the management of public business, 
and that they have no desire to turn over the man- 
agement of public utilities to a class of men who 
must still be considered typical in the municipal 
council of the great American city. 

But when we have admitted freely corruption 
and inefficiency in municipal government, it still 
remains to examine into the causes of these condi- 
tions, for there is a very widespread suspicion that 
a large share of the responsibility therefor must be 
laid at the door of private ownership. A real, vital 
question is this : Would we have the same class of 
men in our common councils which we now find 
there, should public ownership replace private 
ownership.? Is it true that private ownership 
places in office and keeps in office some of qui 



worst municipal wrongdoers? It is important 
that the reader should understand the real nature 
of the problem under discussion, and it is believed 
that these questions which have just been asked 
bring before us a large part of that problem. 
This important problem, the solution of which is 
of national significance, should be approached with 
no partisan bias, and no angry recriminations or 
denunciations should be tolerated. The spirit 
of the injunction, " Come, let us reason together," 
should be the spirit of approach. 

We must clearly and sharply fasten in our 
minds the indisputable fact that, with respect to 
public utilities of the sort under discussion, we are 
confined to one of two alternatives. These alterna- 
tives are, on the one hand, public control of private 
corporations, on the other, public ownership with 
the public control which naturally springs from 
ownership. The experience of the entire civilized 
world has established the fact that we are restricted 
to these alternatives. We may have private street 
railways, private gas-works, private waterworks, 
etc., but in that case it is invariably and in the 
very nature of the case necessary to exercise 
public control over their operations. Charges 
must be regulated, general conditions of service 
must be prescribed, and regulation must be found 
for a thousand and one cases in which public and 
private interests touch each other. This is 
because, on the one hand, the nature of the ser- 
vice rendered is in such a peculiar degree a public 



service, and also because the effective control of 
full and free competition is absent. We may, ou 
the other hand, choose public ownership and 
management. We could, of course, separate 
public ownership from public management, and 
consider each one. In other words, we could 
have a publicly owned urban transportation system 
with private operation. Generally, public owner- 
ship and public management go together; in our 
present treatment we will not undertake to sepa- 
rate them. 

It is freely granted that either one of our two 
alternatives presents immense difficulties. This 
is a further point concerning which there can be 
no controversy among those who really under- 
stand the nature of the case. The evolution of 
industrial society has again brought us problems 
most difficult of solution. If we may use the 
language of design, history teaches us that Prov- 
idence does not intend that men organized in 
society should have what we are always looking 
for in the future, namely, an easy-going time. 
Every age has its problems. In one age they 
may be brought by the inroads of barbarians, in 
another age by famine and pestilence, in another 
age by international wars. We have been dream- 
ing of a coming time when no social problems 
should vex society; but, if history teaches us 
anything, it shows us that in such dreaming we 
are indulging in Utopian aspirations. Every 
civilization has been tested heretofore, and every 


civilization must have its test in the future, our 
own included. One of the tests of our civiliza- 
tion is the ability to solve the problem under 

The question which confronts us is this : Which 
one of the two alternatives promises in the long 
run the best results i 

Those who talk glibly about public control of 
those private corporations owning and operating 
public utilities frequently exhibit a sad ignorance 
of what their proposed remedy for existing evils 
means. They think in generalities, and do not 
reflect upon what control means in details. We 
have to observe, first of all, that public control 
of private corporations furnishing public utilities 
so-called means a necessary antagonism of inter- 
ests in the civic household. Human nature is 
such that those who are to be controlled cannot 
be satisfied with the control exercised. However 
righteous the control may be, those who are con- 
trolled will frequently feel themselves aggrieved 
and wronged, and will try to escape the control. 
It is, furthermore, a necessary outcome of human 
nature that those persons who are to be controlled 
should enter politics in order that they may either 
escape the control, or shape it to their own ends. 
Again, we must remember what vast aggregations 
of men and capital it is proposed to control. The 
men owning and operating the corporations which 
furnish public utilities are numerous, and they 
maintain large armies of employees of aU social 



grades, from the gifted and highly trained attor- 
ney to the unskilled laborer. The amount of 
capital involved in a great city is counted by tens 
of millions. The very nature of the case brings 
it about that there should be persistent, never 
ceasing activity on the part of those to be con- 
trolled. The effort to escape from this control, or 
to shape it, is a part of the efforts by which men 
earn their livelihood, and their activity is as regular 
as their hunger. The efforts of patriotic and 
high-minded citizens, in their self-sacrificing neg- 
lect of their private affairs to look after public 
concerns, may grow weary, but not so the activity 
of the corporations to be controlled. Can a task 
of greater difficulty be well suggested ? It is not 
said that the problem here presented is one which 
it is impossible for modern civilization to solve ; but 
it is well that the general public should know pre- 
cisely what it means. Some of us are to control 
others, and to do so against their will. But who 
are those whom we are asked to control } They 
are very frequently our friends and neighbors. 
I am asked to resist what is esteemed the ex- 
tortion of a gas company; but one of the gas 
magnates may be my neighbor and friend, and 
occupy a pew next to mine in church. Perhaps 
the gas magnate is my employer. Perhaps he 
has just contributed, and with the best intent in 
the world, one hundred dollars to an object which 
I have greatly at heart. Perhaps I am a college 
professor, and the street-car magnate whose rapac- 


ity I am called upon to help hold in check has 
endowed the chair which I occupy. Imaginary 
illustrations can be continued indefinitely, and 
those who desire to do so can in any city make 
them sufficiently concrete. Is it strange that many 
of us who are called upon to control others of us 
should simply refuse to do it ? 

It is possible in this place to do little more than 
to throw out suggestions. It is noteworthy that 
in Massachusetts public control of corporations 
furnishing public utilities has been tried more per- 
sistently than anywhere else, and that in that state 
there is a stronger sentiment than anywhere else in 
the Union in favor of public ownership and public 
management. Serious charges have been brought 
against the Board of Gas and Electric Lighting 
Commissioners, which has to exercise control over 
gas and electric-lighting plants. Even a paper of 
the standing of the Springfield Republican has felt 
called upon to rebuke the board severely for keep- 
ing secret information which it has gathered. The 
attitude of the board is characterized as " extraor- 
dinary." " If the board," says the Springfield 
Republican^ "is empowered to keep secret what 
information it is pleased to, how are the people to 
know that they may not become a mere agency of 
the monopolies to cover up and justify their pos- 
sible undue exactions ? " Insinuations of this kind 
are frequently heard in Massachusetts. Dismiss- 
ing all charges of corruption and bad intention, we 
have as a net result a strong movement in Massa- 



chusetts, away from private ownership of public 
utilities, to public ownership. 

The writer has followed this subject, and the 
trend of opinion with respect to it, for fifteen years 
with some care. In his own judgment the trend 
in favor of public ownership is marked and sur- 
prising. He has seen one investigator after an- 
other start with prepossessions in favor of public 
control of private corporations, and turn away from 
that position as a hopeless one, and take up a po- 
sition in favor of public ownership as the only 
practicable solution under our American condi- 
tions. There lies before the writer a letter re- 
cently received from an attorney, a member of a 
well-known firm in one of our great cities. This 
lawyer has been forced by experience to abandon 
the position in favor of private ownership. He 
says, as the result of long-continued and self-sacri- 
ficing efforts to improve politics in his own city : 
" The alleged benefits of regulation are practically 
as impossible as an attempt to regulate the laws of 
gravitation, for our legislative councils are nomi- 
nated, elected, and controlled by forces too subtle 
and insidious to be attacked, and even to be known. 
... A community cannot regulate against mill- 
ions of dollars organized to prevent it. This temp- 
tation disappears, however, when the municipality 
becomes the owner." 

The difficulties of public ownership are not to be 
denied. They lie on the surface. The problem 
in the case of public ownership is to secure men 



of talent and experience to conduct these enter- 
prises, and keep them in office during good be- 
havior; to engage men for all positions on the 
basis of merit, and, while retaining vast armies of 
employees, to enact such legislation and adminis- 
trative reforms as will prevent employees of the 
city, engaged in furnishing public utilities, from 
either using their political power for their own self- 
ish ends, or from being used for partisan purposes. 
This implies, on the part of society, an apprecia- 
tion of excellence of service and a thorough-going 
reform of municipal civil service. Politicians of 
the baser sort and all those who have selfish ends 
to be gained by political corruption will work 
against such reform. On the other hand, public 
ownership with public operation presents the issues 
in a comparatively simple form. The clarification 
of issues is, indeed, one of the strong arguments 
in favor of municipal ownership. Who knows to 
what extent employees on the street railways of 
Baltimore, Philadelphia, New York, and Chicago 
are appointed through the influence of politicians ? 
It is known, however, that many appointments are 
made through the influence of politicians of pre- 
cisely the worst sort. It is furthermore known that 
these corporations are now generally in politics. 
But because the corporations furnishing these pub- 
lic utilities are owners of private property, and be- 
cause they conduct a business which is only quasi- 
public, the political corruption with which they are 
connected is hidden and obscure, and voters are 



confused and perplexed. Public ownership car- 
ries home to every one the importance of good 
government, and arrays on the side of good gov- 
ernment the strong classes in a community now so 
often indifferent. Frequently men who are power- 
ful in a community, in working for good govern- 
ment, work against, rather than for, their own 
private interests. It is, indeed, gratifying to see 
men of wealth, as frequently as they do, turn aside 
from selfish considerations to promote measures 
calculated to advance the general welfare. But 
can we expect this kind of conduct persistently 
from the great majority ? Have we any right to 
expect it ? A personal allusion is sufficiently in- 
structive to warrant reference to it. When the 
writer had invested what was for him a consider- 
able sum in gas stock, he tried to answer for him- 
self this question: As an owner of gas stock, 
exactly what kind of municipal government do I 
want ? The government of the city in which was 
located the gas-works in which the writer was in- 
terested was a stench in the nostrils of reformers 
throughout the country: but he could not per- 
suade himself that as an owner of gas stock any 
very considerable change was for his interest. The 
city government, as it then was, was a " safe " one, 
and the result of a change could not be foretold. 
Is not this, as a matter of fact, the solution of the 
problem which owners of stock in street railways, 
gas-works, and similar enterprises generally reach 
when they look at municipal reform solely from 


the point of view of self-interest? And can we, 
then, be surprised at a certain apathy and indiffer- 
ence on the part of what are called the "better 
classes " in a community ? Men of great wealth 
have been known to work directly against their 
own narrow interests for the public weal, but has 
an entire class of men ever been known to do 

A further result of municipal ownership would 
be a better balance between private and public 
interests, and this better balance would strengthen 
the existing order against the attacks of socialists 
'and anarchists, on the one hand, and unscrupu- 
lous plutocrats, on the other. A balance between 
private and public enterprise is what is funda- 
mental in our present social order, and a disturb- 
ance of this balance consequently threatens this 
order. This balance is favorable to liberty, which 
is threatened when it is disturbed either in the one 
direction or the other. Any one who follows pass- 
ing events with care cannot fail to see that it is 
menaced by socialism, on the one hand, and by 
plutocracy, on the other. A man of high stand- 
ing in Philadelphia, himself a man of large wealth, 
when presiding at a public meeting recently, stated, 
practically in so many words, that a professor in a 
school of some note had lost his position on ac- 
count of a monograph which he wrote in relation 
to the street railways of that city. This mono- 
graph was temperate in tone, and its scholarly 
character elicited commendation on all sides. We 



need not go into the merits of this particular case, 
but we cannot fail to notice disquieting rumors in 
regard to the attacks upon freedom of speech, 
which are an outcome of private ownership of 
public utilities. There is a widespread apprehen- 
sion that the utterance of opinion upon one side 
promotes one's interest, and that the utterance of 
opinion upon the other side may prove damaging. 
Mathematical proof cannot well be adduced, but 
readers can, by careful observation, reach a con- 
clusion as to the question whether or not our in- 
dustrial order is menaced by plutocracy, always 
bearing in mind that plutocracy does not mean 
honestly gotten and honestly administered wealth. 
There are good rich men, and bad rich men, as 
there are good poor men, and bad poor men. Does 
private ownership of public utilities, on the one 
hand, tempt rich men to wrong courses of action, 
and does it, on the other hand, place great power 
in the hands of unscrupulous wealth } 

In the restricted space of the present essay it is 
impossible to go statistically into experience. The 
question may be raised, however. Has any one ever 
noticed an improvement in municipal government 
from a lessening of the functions of munici- 
pal government } Can any one point to a munici- 
pal government which has improved because its 
duties have been diminished, and the number of 
its employees lessened.^ If we turn away from 
local government, do we find that it is through the 
lessening of the function of government in general 


that an improvement is achieved? At one time, 
the Italian government operated the Italian rail- 
ways. Later it leased the railways to a private 
corporation. Has this retirement of Italy from 
the operation of the railways produced a regenera- 
tion in public life ? As we travel over this country, 
and observe the course of local government, do we 
not, on the contrary, find that, on the whole, it has 
improved as its functions have increased, and as it 
appeals directly and effectively to larger and larger 
numbers? The case of England is a very clear 
one. If we go back fifty years, we shall probably 
find that the government of English cities was 
quite as bad as ours is now. During the past fifty 
years there has been a continuous improvement, 
and this has accompanied continual expansion of 
municipal activity, while at the same time, through 
an extension of the suffrage, English municipal 
government has become increasingly democratic in 
character. We must hesitate about establishing a 
causal connection between these two movements, 
but is it unnatural to suppose that there maybe 
such a connection ? When there is a great deal at 
stake, when the city has much to do, good govern- 
ment of the cities appeals to all right-minded per- 
sons; and if there is no division of interests 
through private ownership, we ought, in a civilized 
community, to expect to find all honest and intel- 
ligent people working together for good govern- 
ment. A tangible basis is afforded the masses for 
an appeal for their own higher interests, and reliance 



is placed upon municipal self-help. Instead of 
asking great private corporations to do things for 
them, the people are told to help themselves. 

Mistakes and wrongdoing must be anticipated 
under either one of our two possible systems. 
What about the relative seriousness of the mis- 
takes and wrongdoing, however.? We have a 
certain demoralization in each case, and a certain 
loss. While in the case of public ownership we 
have an opportunity to recover from mistaken 
action, in the case of private ownership mistaken 
and wrong action is often irretrievable in its con- 
sequences. Take the case of New York City as 
an illustration. Jacob Sharp secured a franchise 
for the Broadway surface railway through whole- 
sale corruption, and was sent to the penitentiary. 
The franchise, however, was retained by those 
into whose hands it fell, and others have entered 
into the fruits of his theft. Under our American 
system of government, in cases of this sort, stolen 
goods are retained. The franchises are retained 
and the forgotten millions continue to suffer, be- 
cause their rights have not been adequately safe- 
guarded. With the other policy, namely, that of 
public ownership, how different would be the 
result ? If the street railways were mismanaged, 
or their earnings stolen, it would be sufficient to 
turn out the municipal plunderers. Too many 
overlook what is distinctively American in our 
problem ; namely, our constitutional system, which 
protects franchise grants when once made, and 


so renders irretrievable a mistaken policy, pro- 
vided we have the system of private ownership. 
Let it be distinctly understood that the position 
is not taken by the present writer in favor of 
municipal ownership at any and all times, aqd 
everywhere and under all circumstances. It must 
come in the right way, it must come deliberately, 
and it must come provided with adequate safe- 
guards. It must come as a part of other move- 
ments, especially of full civil service reform. But 
it is calculated in itself to promote these other re- 
forms, and in some cases municipal ownership will 
be the first step in the direction of that full civil 
service reform which is so sadly needed.^ In 
some cases civilization may be in too low a condi- 
tion to permit municipal ownership. The socializa- 

1 A few years ago a successful candidate for the mayoralty in 
Des Moines, Iowa, made this statement in his campaign: <'If 
elected, I expect to continue in my attempts to carry out the prin- 
ciples of my platform of two years ago, reiterated in the platform 
of this year, for the public ownership and control of public utilities 
such as water, gas and electric light plants, street railwa3rs and tele- 
phones. ... I should like to see a civil service law enacted to go 
hand in hand with these reforms, but I do not believe that we should 
wait for such a measure. I am firmly of the opinion that the public 
ownership of such franchises will of itself bring about civil service 
reform. Municipal ownership will do more than any other one 
thing to improve city government in America. In my opinion 
much of the poor and bad government in city affairs is due to the 
influence of franchise-holding corporations. It is to their interest 
to have poor government, to secure the election and appointment 
of officials whom they can control to their selfish ends. We have 
seen examples of this in our own city, where local corporations 
exerted their influence against salutary measures looking toward 
civil service and other similar reforms." 
R 241 


tion of public sentiment which must lie back of 
proper social action may not have gone far enough. 
The question is : Have we the social man back of 
the social action which we advocate? If we are 
talking about the heart of Africa, with its individu- 
alistic blacks, unquestionably we have not the 
social man who would make possible any con- 
siderable amount of social action. Among bar- 
barians and semi-civilized people the few must do 
things for the many. Social action must not be 
forced down from above, and it must not come 
accidentally, if it is to be successful. It must come 
as the result of full and free discussion, and of full 
and free expression on the part of the people. It 
is on this account that the initiative and referen- 
dum, in a country like ours, may properly accom- 
pany the social action. Have we in our own country 
the social man to back social action ? If he does 
not everywhere exist, he is coming, and coming 
rapidly, and the amount of social action which the 
socialization of sentiment makes possible and desir- 
able increases in proportion as he makes his appear- 
ance. The question of municipal ownership is a 
question of social psychology. It turns on the 
nature of the social mind. 

II. Note on the Establishment of a Parcels Post^ 
and the National Ownership of the Telephone 
Telegraphy and Railways. 

The question naturally arises to what extent are 
the arguments which have been adduced in favor 



of municipal ownership of natural monopolies ap- 
plicable to monopolistic businesses which operate 
on a national scale, and which, therefore, must be 
owned and managed by the nation, if public owner- 
ship is to replace private ownership. This is a 
large question, and here and now it is proposed 
simply to bring forward a few pertinent sugges- 
tions which naturally connect themselves with the 
treatment of local monopolies. 

The first three undertakings mentioned do not 
ofifer special difficulties, and the arguments in 
favor of municipal ownership would, in the main, 
hold with reference to them. The post-office, 
even with all its imperfections, is serving the peo- 
ple of the United States admirably. Generally 
speaking, one finds courteous and considerate 
treatment accorded to the public by the officials, 
which frequently is in pleasing contrast to the 
brusqueness of the officials of great private mo- 
nopolistic corporations. The effort made to serve 
the public and to see that mail reaches its correct 
destination is remarkable. If any kind of clew 
is g^ven, the person to whom a letter is addressed 
generally receives it, even if the address is incor- 
rect. The writer, while in Baltimore, has received 
letters which were directed to him in Boston, and the 
success of the post-office in finding persons is some- 
times almost wonderful.^ This furnishes marked 

1 Since writing the above the author has received a letter ad- 
dressed, "Richard T. Ely, Johns Hopkins University, Stanford, 



contrast with the very slight efifort on the part of ex- 
press companies to find persons, and their frequent 
indifference about addresses, as they do not gen- 
erally have any system of keeping them. When 
a telegraph or express company finds diflBculty 
about an address, a postal card is put in the post- 
office addressed as the message or parcel is, and 
the post-office generally finds the person. This 
is only one of many illustrations which could be 

Many of the defects in the post-office are fre- 
quently attributed, by those who should know, to 
the interested efforts of private persons to prevent 
a satisfactory development of this branch of the 
public service. The rate of one cent an ounce for 
merchandise is high, and the rate of one cent a 
pound for periodicals, when sent out by publishers, 
seems too low. What is needed is an arrange- 
ment whereby parcels up to, say, fifteen pounds 
can be sent through the post-office, with a charge 
which will cover expenses. In Germany the 
charge for a parcel sent to any part of the Ger- 
man Empire is twelve cents for any weight up to 
something like ten pounds. It has been claimed 
that on this part of the post-office business there 
is a loss in Germany, and with our greater dis- 
tances and the high charges exacted from the 
post-office by the railways a higher rate would be 
required. But a rate which covers cost would be 
far less than that now exacted by the express com- 
panies, and altogether apart from that would be 



the convenience of reaching the entire country, 
and the service would be unified. This is an 
important consideration, because in the case of 
each one of the services which we are now discuss- 
ing, unity of management is one of the conditions 
of excellence in service. Other things being equal, 
the nearer the approximation to unity the better 
the service. About the importance of the parcels 
post there will probably be little difference of 
opinion on the part of competent persons who are 
strictly impartial. 

The telephone service is largely local, but the 
long-distance service becomes of increasing im- 
portance, and with the extension of the long-dis- 
tance service and a decrease in charges its relative 
importance would increase still further. This is 
something which is readily appreciated by those 
who enjoy what is essentially a local service by a 
local company. Many of the smaller cities in the 
United States now have local companies which 
compete with th^ so-called Bell telephone with its 
national connections. The local service is fre- 
quently excellent and charges low, but the great 
national company is able to maintain its existence 
on account of its far wider connections. It is 
obvious to every one with experience that unity in 
the telephone service is a consideration of decisive 
importance, so much so that it is likely to be secured 
ultimately either by private or public action. The 
only method of securing the unified service and 
the extensions which are desirable, with low charges, 



is through government ownership, which has worked 
well wherever it has been tried. As a means of 
communication it naturally belongs to the post- 
office, and can advantageously be operated in con- 
nection therewith. The farmers are beginning to 
appreciate the importance of the telephone, and are 
urging its extension as a means of removing the 
isolation of farm life. There are good reasons for 
believing that the telephone can be so extended 
throughout our rural districts as to render life in 
the country far more attractive, and to promote 
the intelligence of the farming class. This is a 
general social consideration which constitutes a 
strong argument for the national ownership of the 

The telegraph service is similar in character, and 
along with the telephone could advantageously be 
operated as a part of the postal system of the 
country. It is simply a quicker method of trans- 
mitting intelligence than the letter. Every great 
civilized country, outside the United States, enjoys 
the advantage of public ownership of the telegraph, 
and in European countries, roughly speaking, the 
charges for messages are from ten cents to fifteen 
cents, regardless of distance. For twelve cents a 
message can be sent from one end of the German 
Empire to the other, and for many of these mes- 
sages in this country a charge of at least fifty cents 
would be exacted. The figures which attempt to 
show low charges for sending telegrams in the 
United States are entirely unscientific and mis- 


leading. Quite often a long distance is taken in 
this country and is compared with a similar long 
distance in Europe, although this long distance in 
Europe means an international telegram which has 
to pass over four or five countries, and frequently 
will also include cable service. It must be borne 
in mind that distance has relatively little to do with 
the cost of telegraphing, but the cost and charges 
are naturally increased in the case of international 
telegrams, especially when cable service is involved. 
Altogether apart from this is the superior excel- 
lence of the service under government ownership, 
about which no person who has lived in a country 
like England or Germany is likely to be in doubt. 
It is also important in this connection to consider 
the condition of the employees. The lot of the 
telegraph employees in this country in our great 
cities can easily be ascertained by observation and 
inquiry. The offices are frequently in basements 
where the sanitary conditioi^s are far from being 
the best. Employees are very largely young boys 
on small pay, who are in great danger of suffering 
contamination on account of the places to which 
they are sent. The standard of admission to the 
service is very low, and in the vast majority of cases 
the service leads to no desirable future for those 
engaged in it. This is in marked contrast with 
the conditions in our post-office and also with the 
conditions which obtain, generally speaking, where 
we have government ownership. There lies before 
the writer a review of two books which gives in- 



structions and directions for those who are pre- 
paring for the examination for admission to the 
telegraph or telephone service in the post-office 
of the German Empire. It appears that the quali- 
fications imply a considerable acquisition of knowl- 
edge and some natural ability. The telegraph 
officials have to pass examinations, not only in 
telegraphy, but also in physics, chemistry, geog- 
raphy, and mathematics. Those who enter these 
services find in them a career. The service is also 
performed under wholesome conditions by persons 
of suitable age, so that we have better moral and 
physical conditions of employment for a great body 
of men as a result of government ownership. We 
have in consequence, to be sure, higher expenses, 
but a decrease in human costs. 

When we come to a treatment of railways, new 
considerations of vast importance enter into the 
discussion. Very generally when the nationaliza- 
tion of railways is mentioned, the difficulties con- 
nected with the civil service are adduced as an 
argument against nationalization. This argument, 
while important, is not conclusive. We have the 
fact of the present interference of railways in 
politics. We have also the possibilities of organ- 
izing railway employees on a more or less military 
basis and protecting them and the general public 
from the dangers connected with partisan politics. 
It is interesting in this connection to remember 
what Bismarck said about the employees of the 
Prussian railways and the influence of the gov- 



emment over them when the Prussian Parliament 
was debating the purchase of private lines in 1879- 
1880. He made the point that at that time it was 
very easy for the government to secure the votes 
of railway employees through arrangements with 
the officers of the railway. The railways, he 
stated, continually desired something of the gov- 
ernment, and were always willing to pay in votes 
of railway employees for the desired concession. 
After the railways had been purchased, he said 
that the employees would at least have the protec- 
tion of the civil service law, whereas then they 
had nothing. It is believed that a careful exami- 
nation of all the factors which enter into the 
nationalization of the railways, including the psy- 
chical factors, will show that the difficulties con- 
nected with the employment of so large a number 
of men by the government have been unduly 
magnified, although it is plain that a grave prob- 
lem in this particular does exist. 

The most serious objection against the govern- 
ment ownership of railways is connected with the 
question of rates. Every change in rates means a 
change in the relative advantages of one part of 
the country as compared with another part of the 
country. Every city in the country is now striv- 
ing in one way or another for a change in rates 
which will help it, and sometimes this is an increase 
in rates in order to bring to one city business which 
at present is carried on elsewhere. Not long ago, 
the merchants of a Wisconsin city made vigorous 



protests against the low passenger charges to Chi- 
cago in order to keep the people in the city from 
going to Chicago to purchase supplies of various 
kinds. Under national ownership and manage- 
ment of the railways there would be a continual 
struggle of section with section for advantageous 
rates, and unless the rate problem could be worked 
out in some simple, easily comprehended way which 
would commend itself to the public at large, this 
struggle of section with section could scarcely fail 
to prove disastrous. No one can tell what the out- 
come of this sectionalism might be. But what we 
can see in regard to the pressure of each section 
of the country, at the present time, to secure ad- 
vantages from federal legislation, and the frequent 
shocking disregard displayed by one section for the 
interests of other sections or of the country as a 
whole, must lead to very grave apprehensions con- 
cerning the result of sectional struggles in the 
adjustment of railway freight and passenger rates, 
especially, however, of freight rates. This is the 
most serious obstacle in the way of nationalization 
of railways, and brings before us different con- 
siderations from those which are decisive in the 
case of local monopolies, or the post-office, tele- 
graph, or telephone. 

It can indeed be argued that we have the rate 
problem with us as a very troublesome problem at 
the present time, and that through the Interstate 
Commerce Commission the national government 
participates in the solution of this question. This is 



all true, but it is certain that at the present time 
we do not have that kind of a sectional struggle 
which we must fear under government ownership. 
Perhaps the greatest single danger in the private 
ownership of railways is that it tends first to form 
classes, and then to array class against class. It 
forms classes in the very nature of the case. First 
we have the classes in the railway service. About 
one per cent of those engaged in the service are 
officers and the rest employees, and the contrasts 
among these employees in remuneration and in 
conditions of employment are vast, and, whether 
they ought to do so or not, do have a tendency to 
cultivate bitterness and class division. Under 
government employment the differences would be 
diminished by improving the condition of the 
ordinary employees and by lessening the salaries 
received by those occupying the higher positions. 
Sanitary conditions would be improved, and the 
dangers connected with the service would be 
diminished, for the government could not with- 
stand the agitation for improvement as private 
corporations can. The most important question 
in this connection is whether or not the clamor 
on the part of employees would not result in an 
undue shortening of hours, and a disproportionate 
increase in the wages of the employees. There 
is also a question whether. the clamor for reduced 
rates might not push down the rates to a point 
where they would be unremunerative and fail to 
cover expenses of operation. We have, then, as 



a favorable aspect of the influence of the voters 
in the case of government railways the removal 
of dangers and improvement otherwise in the 
conditions surrounding railway employment; on 
the other hand, we have the danger that the 
government could not stop at the right point in 
the adjustment of wages and hours of service, 
and also in lowering charges for freight and pas- 
senger service. 

But there is still another way in which the 
private ownership of railways tends to class for- 
mation, and that is through the favoritism shown 
to individuals in the community, which is largely 
responsible for the bad features of the trust move- 
ment. Everywhere throughout the United States 
we can find manufacturers and shippers who have 
been favored, and if there are any favored it is 
necessarily at the expense of others. We have 
favored classes, and this tends to promote class 
formation and to incite one class to hate another. 
In conclusion, then, we have as the chief count 
against public ownership of railways the danger 
of sectionalism, and as the chief count against 
the private ownership of railways the fact that 
private ownership encourages the formation of 
classes and an increasing estrangement of the 
classes when they are formed. At the present 
time the danger of sectionalism would seem to be 
more serious than the other danger. Whichever 
alternative we take, it is possible to effect im- 
provement and to devise means to lessen the 



evils which are incident to the form of ownership 
selected. Private railways can be controlled if 
government is strong and pure enough for this 
control. Wages and conditions of service, as 
well as rates, can be adjusted under government 
ownership if government is strong and pure 
enough to devise right standards and to resist 
popular clamor. 


While a great deal has been written on the sub- 
ject of this chapter, it will generally be conceded 
that it is for the most part entirely unsatisfactory. 
There are, however, some exceptions. All recent 
text-books of economics deal with this subject in 
what is considered its proper place. In addition 
to these text-books, it is sufficient for the purposes 
of the present chapter to call attention to a few 
other works. 

Bemis, Edward W., and others, Municipal Monopolies. 
New York, 1899. This book is altogether the best work 
on the subject ; with which it deals. 

Hadley, Arthur T., Railroad Transportation ; its History 
and its Laws. New York, 1885. A scientific treatment 
of the subject ; unfriendly to national ownership. 

Hudson, James R., The Railways and the Republic. New 
York, 1886. A sharp arraignment of the railway man- 
agement of the United States, with proposal of public 
ownership of the road-bed with private and competing 
operation ; a plan which finds few, if any, advocates at 
the present time. The chief value of this work is its 
criticism of railway management. 



Meyer, B. H., Railway Legislation in the United States. 
New York, 1903. Gives results of regulation in the 
United States. 

In addition to books, mention may be made of Municipal 
Affairs, published by the Reform Club Committee on City 
Affairs, 52 William Street, New York City. This is altogether 
the best magazine which deals with the various phases of mu- 
nicipal government, and has many excellent articles on the 
subject of municipal ownership. 




There is unanimous agreement among all 
writers that within the past century the production 
of wealth has been increasing enormously. Never 
before has man been so successful in exploiting 
the earth as at the present time. But there is no 
such unanimity in the answers to the two questions 
of how this wealth is actually distributed, and how 
it ought to be distributed. Of course, we all know 
there is no equal division of wealth. Some people 
are very rich and some are very poor. But are 
these the exceptions i Are the mass of the people 
well oS? Or are the many poor because the few 
are so very rich ? Whatever the facts, how great 
ought the inequaUties to he? Before entering 
upon a discussion of these questions, we must 
consider some definitions and distinctions. 

The term " concentration of wealth " is here 
used in the sense of " concentration in the own- 
ership of wealth/* as distinguished from the con- 
centration of capital in large-scale establishments. 
If the stock of the United States Steel Corporation 
were owned by individuals holding one share each, 



the concentration in industry would be just as 
great as it is now, but there would be a wide 
diffusion in the ownership of the wealth of the 
corporation. Possibly it may be true that the 
two kinds of concentration are inseparable, but 
at any rate the ideas are totally different. Ob- 
vious as this distinction may seem, it is one 
that is constantly being ignored. An excellent 
illustration of this fact is seen in the notable 
series of articles that appeared in the New York 
Independent for May ist, 1902. These articles 
were written by persons in various walks of life 
on the general topic, " The Concentration of 
Wealth." Some of the writers discuss the 
merits of large-scale production, others the dis- 
tribution of wealth, • and only one makes the 
distinction clearly. 

But the idea of concentration in the ownership 
of wealth is itself somewhat perplexing. In 
general terms we may say that it means a diver- 
gence from an equal distribution, but what is the 
criterion by which to say that the concentration is 
small or great } Is it sufficient to say that when 
wealth is equally distributed there is no concentra- 
tion, that when it is all in the hands of one person, 
there is the greatest possible concentration, and 
that between these two extremes there is every 
possible gradation } The difficulty that may arise 
is shown by the following example: Let the 
diagrams represent two ways of distributing one 
hundred dollars among ten persons : — 



19 17 IS 13 n e T e » 1 


16 16 16 16 ie 

Is the concentration greater or less in the second 
case than in the first ? On the whole, we should 
probably say greater, since the richer half of the 
group has a larger proportion of the total wealth 
in the second case, but there has also been a dif- 
fusion within each half. We must recognize, 
therefore, that there may be movements both of 
concentration and diffusion going on simultaneously 
and one has to be balanced against the other, 
s 257 


The matter is more complicated when we try to 
estimate the movement toward * concentration or 
diffusion over a period of years, during which the 
total population and total amount of wealth have 
both changed. A common method is to divide 
the population into classes according to amount of 
income received or property held, and then to com- 
pare the number of individuals in each class in the 
two periods. That there is great danger here of 
reaching erroneous conclusions can be made clear 
from another simple illustration : — 

19 IT 10 13 11 




34 30 26 22 18 14 10 6 2 



Let the first diagram represent the conditions of 
distribution in the first period, and the second 
diagram the conditions when the per capita wealth 
(which takes into account changes in both wealth 
and population) has been doubled, with, however, 
no change in the degree of concentration. Thus 
in each case the ratio of the richest man's wealth 
to the poorest man's wealth is 19: i. Now let us 
proceed in the ordinary way and divide the group 
into classes, noting the number of individuals in 
each class : — 


Number in First 

Number in Second 

and less than 5 dollars . 

5 and less than 10 dollars . 
10 and less than 15 dollars . 
15 and above 








There appears to have been a change in the 
relation of the classes to each other, but we know 
this is not the case. The error is apparent : the old 
class divisions do not mean the same in the second 
period, and we should have changed them accord- 
ing to the per capita increase in wealth, thus : — 



and less than 10 dollars .... 
10 and less than 20 dollars .... 
20 and less than 30 dollars .... 
30 and above 







Comparing these results with those for the first 
period, we find there has been no change. 

The practical appUcation of these considera- 
tions is seen when we study the significance of the 
growth in the number of millionaires. This growth 
is not in itself an evidence of increasing concen- 
tration. There has undoubtedly been an increase 
in per capita wealth in the last half-century, so 
that the millionaire class has a different meaning 
now. It would be more accurate to compare the 
number of millionaires of to-day with the number 
of persons having, say, $500,000 in 1850. For a 
similar reason an absolute betterment in the condi- 
tion of the poorer classes may co-exist with a 
growing concentration of wealth. The laborer 
may get higher wages absolutely, and yet not get 
what he deems his full share in the increasing 
wealth, — as, for example, if his wages are 5 units 
out of a total product of 10 in one period, and 10 
out of a total product of 30 in another, his wages 
would have doubled, but his share would have 
decreased from one-half to one-third. 

Let us now ask what are the facts in regard to 
the actual distribution of wealth. There are two 
different methods to be pursued in ascertaining 
them, one direct, the other indirect. By the 
former an attempt is made to get a statistical 
statement of the actual incomes received or prop- 
erty held; the latter is a symptomatic method, 
conclusions being drawn from such general indica- 
tions of an increase or decrease in well-being in 



various classes of the community as may be de- 
rived from statistics of consumption and of wages, 
and from general observation. Neither method 
has yielded results that can be said to command 
very great confidence on the part of economists. 

Let us begin with the direct method, and con- 
sider first a table of incomes in the Grand Duchy 
of Baden, based on the income-tax returns in that 
country ^ : — 



Persons Assessed 

Income of those 



Per Cent 
of Total 

Actual (in 

Per Cent 
of Total 

I. 500-900 
II. 1,000-1,400 

III. 1,500-2,900 

IV. 3,000-4,900 
V. 5,000-9,900 

VI. 10,000-19,500 

VII. 20,000-24,500 

VIII. 25,000-29,000 

IX. 30,000-39,000 

X. 40,000-49,000 

XI. 50,000-74,000 

XII. 75,000-99,000 

XIII. 100,000-149,000 

XIV. 150,000-199,000 
XV. 200,000 and over 


































1. 12 














1 " Handworterbuch der Staatswissenschaften," 2d ed., Vol. Ill, 
pp. 369-370. 





Incomb of thosb 




Per Cent 
of Total 

Actual (in 

Per Cent 
of Total 

I. 500-900 
II. 1,000-1,400 

III. 1,500-2,900 

IV. 3,000-4,900 
V. 5,000-9,900 

VI. 10,000-19,500 

VII. 20,000-24,500 

VIII. 25,000-29,000 

IX. 30,000-39,000 

X. 40,000-49,000 

XI. 50,000-74,000 

XII. 75,000-99,000 

XIII. 100,000-149,000 

XIV. 150,000-199,000 
XV. 200,000 and over 





























4.31 7.000 













One who is conservatively inclined might draw 
the conclusion from this table that wealth was not 
greatly concentrated because less than i per cent 
of the incomes assessed were over 10,000 marks 
a year, both in 1886 and 1896. This is the 
method of interpretation employed by the French 
economist, Leroy-Beaulieu, when he cites, as an 
illustration of the wide diffusion of wealth, the 
fact that in 1896 there were only 2570 persons in 
Paris having an income of over 100,000 francs a 



year.^ But such considerations do not bring out 
the true state of the distribution. As Dr. Charles 
B. Spahr^ has pointed out, the proportion of the 
total amount of wealth held by these classes is an 
important consideration. In the table before us 
we have no information in regard to the number 
and amount of incomes below 5CX) marks, but in 
regard to the persons assessed, the following state- 
ments may be made: the poorest two-thirds of 
these persons had about one-third of the total 
income in 1886, and the richest .69 of one per cent 
had 12.78 per cent of the total income. 

So conservative a writer as the late Professor 
Richmond Mayo-Smith has drawn similar conclu- 
sions from the statistics which he quotes for other 
countries.^ In Prussia he finds " that 70 per cent^ 
of the population have incomes below the income 
tax, and that their income represents only one- 
third of the total income of the whole population. 
An additional one-fourth of the population enjoy 
one-third of the total income; while about 4 
per cent at the upper end of the scale enjoy the 
remaining one-third.** In Saxony the statistics 
show that "two-thirds of the population possess 
less than one-third of the income; and that 3.5 
per cent of the upper incomes receive more than 

1 " Essai sur la Repartition des Richesses et sur la tendance k 
une moindre inegalite des conditions," 4th ed., Paris, 1896, p. 564. 

2 " An Essay on the Present Distribution of Wealth in the United 
States," 2d. ed., New York, 1896, p. 16. 

« " Science of Statistics," Ft. II, " Statistics and Economics," 
Ch. XIII. 



the 66 per cent at the lower end." In England 
"about lo percent of the people receive nearly 
one-half of the total income." Professor Mayo- 
Smith says, however, that there is great uncertainty 
about this statement (which is from a table pre- 
pared by Sir Robert Giffen), " owing to the diffi- 
culties of the income tax and also of estimating 
the average income of the non-income-tax paying 

In this country it is more difficult to get direct 
statistics on the actual state of the distribution of 
wealth, since we do not have general income-tax 
statistics. The most notable attempt in this direc- 
tion has been made by Dr. Charles B. Spahr. He 
examined the Surrogate Court records of thirty- 
six counties in New York State, and classified the 
estates admitted to probate during the two years, 
October, 1892, to September, 1894, and then ap- 
plied the proportions to the nation at large. In 
doing so, however, he excluded the returns from 
New York and Brooklyn because within these 
cities the concentration of wealth is extreme. 
" The distribution of wealth in the whole state of 
New York," says the author, "is of less impor- 
tance than the distribution in the district lying 
outside of the two great cities. This district is 
typical of the country at large ; for if the distribu- 
tion of property is wider in the distinctively agri- 
cultural states, it is much narrower in the excluded 
metropolis." The table constructed on this as- 
sumption is as follows : — 



The United States, 1890^ 






The wealthy classes, 

1550,000 and over . 
The well-to-do classes, 

$50,000 to $5000 . 
The middle classes, 

J55000 to I500 . . 
The poorer classes, 

Under I500 . . . 











Total .... 




From this table he reached the conclusion that 
less than half the families in America are property- 
less; nevertheless, seven-eighths of the families 
hold but one-eighth of the national wealth, while 
but I per cent of the families hold more than the 
remaining 99. We may say, therefore, that such 
statistics as we have by the direct method all indi- 
cate a marked concentration of wealth both in this 
country and Europe. 

But are the statistics correct ? Those for Europe 
are probably substantially so, but are Dr. Spahr's 
conclusions for this country anywhere near the 
mark ? Without doubt the estimate is partly based 
on assumptions, but are these assumptions un- 
warranted ? 

Professor Mayo-Smith offers the following ob- 
servations in connection with Dr. Spahr's esti- 

^Loc, ci^., p. 69. 


mate : (i) Many men put real estate and personal 
property in the names of their wives or children 
during their own lifetime, so that this property 
never passes by inheritance. (2) The capital of 
a business enterprise is often transferred to sons, 
so that only a part or none of the property passes 
by inheritance. The wives and daughters are pro- 
vided for by notes or obligations assumed by the 
sons who take the business. (3) A man's savings 
are often represented by his life insurance, which 
is really property, but which does not pass through 
the Probate Court. (4) Thousands of small estates, 
consisting of personalty only, especially where 
there is a single heir or a small family, are settled 
without recourse to the Probate Court. (5) Among 
the so-called propertyless there are thousands of 
young men who have not yet acquired farms, or 
homes, or business capital, but who are on the 
road to success, and who later will become property 

It is not clear that the first three of these con- 
siderations compel us to reduce the estimate of the 
relative holding of the rich because the omissions 
may well amount to as much among the rich as 
among the lower classes. The fourth considera- 
tion does indicate that the holding of the poor is 
somewhat underestimated. The fifth brings out the 
interesting point that in a community in which all 
men acquired property in equal degree as they 
grew older, a statistical table might nevertheless 
show that the wealth at a particular time was con- 


centrated in the hands of the few, that is, the older 
men. But the estimate in question is not open to 
this objection because Dr. Spahr, taking the Pro- 
bate returns as a basis, found what the distribution 
was among those people who died ; and in applying 
this proportion to the whole number of families, 
he really stated the distribution as it would be 
if all the families had acquired all the property 
which they ever would acquire. His method, how- 
ever, is open to other criticisms, but it must be ac- 
knowledged that he evinces a disposition to avoid 

The direct statistical method is still more difficult 
to apply in answering the question whether the con- 
centration is growing or diminishing. It requires 
that the same kind of statistics be had for two 
rather widely separated periods of time. Further- 
more, the statistics usually are in such shape 
that we cannot rearrange them in new classifica- 
tions to allow for the change in per capita wealth, 
as we have seen one must do. In the table of in- 
comes for Baden given on pages 261 and 262 we 
have figures for the two years 1886 and 1896. The 
percentage of the incomes below 1000 marks has 
decreased slightly, but so has the percentage of the 
total income attributed to this class ; and taking the 
slight per capita increase in total income into con- 
sideration, the indication is that the concentration 
has not changed. Again, the richest 0.09 per cent 
in 1886, and the richest 0.09 per cent in 1896 had 
respectively 5.70 and 6.83 per cent of the total 



income, indicating possibly a slight movement tow- 
ard concentration. 

In England, a comparison of the estates admit- 
ted to probate in 1838 and 1891, by a method 
of interpretation similar to the one used in the 
foregoing paragraph, shows a marked concentra- 
tion. Calculating from the figures quoted by Dr. 
Spahr, we find that in 1838 the richest 4 per cent 
of the estates amounted to 56.6 per cent of the 
total wealth, while in 1891 the richest 4 per cent 
of the estates amounted to 68.3 per cent of the 
total wealth. In this country there are practically 
no statistics in this connection. 

Let us now turn to the indirect method. Just 
as a surveyor checks with his common sense the 
results of his measurement of a field, so we must 
ask whether the results of the direct method are 
reasonable or absurd. Some writers, in order to 
show a diffusion of wealth, point to a general in- 
crease in wages and to the fact that the poor now 
consume many things that the rich could not have 
afforded a number of years ago. What they really 
do succeed in proving is that the lower classes have 
not been wholly excluded from the benefits of the 
general increase in wealth ; but no matter how 
firmly that point is established, it still remains an 
open question whether the concentration is greater 
or less. 

Another method of checking the results of the 
direct method is to appeal to common observation. 
What do persons coming from different sections 



of the country or those who have travelled widely 
report as to what they have actually observed? 
Those coming from the smaller towns and from 
the country seem to be impressed with the exist- 
ence of a general well-being.^ Comfortable homes 
seem to be the rule, and the excessively rich the 
exception. But those who live in the large cities 
are struck with the wide gulf between the rich and 
the poor. Many are in abject misery, and some 
are spending for trifles what would be a fortune 
to others. Obviously, such general considerations 
cannot lead to very definite conclusions, but it 
does not seem to the author that, on the whole, 
they contradict the impression which one gets 
from the statistics by the direct method. It doubt- 
less is true that all classes have shared in the 
increased wealth production, and yet it is true that 
a considerable degree of concentration exists in 
the United States at the present time. A rather 
small part of the population receives a rather large 
part of the nation's income. Of course, we do not 
want an equal distribution. It is desirable to give 
men a special reward for special effort, and that 
means inequality of income. The captains of in- 
dustry must be paid for their industrial leadership, 
but it is not improbable that society is now paying 
them a price somewhat higher than necessary. 

1 This is particularly the case in the middle Weft. 




Much as this subject has been talked about, very 
little of value has been written upon it The best 
works for use in connection with this chapter, are 
the following : — 

GiFFEN, Sir Robert, The Progress of the Working Classes 
in the Last Half-century with Note on American Wages. 
New York, 1888. A well-known and popular presenta- 
tion by one of the leading statisticians of our time. It is 
held by many, that a more critical examination of statis- 
tics gives a less roseate view of the progress of the 
working classes. 

Spahr, Charles B., The Present Distribution of Wealth in 
the United States. New York, 1896. This work gives 
references to other books dealing with the same subject. 
The work contains some mistakes, and the subject is 
inadequately developed, and statistically is only brought 
down to 1896. It needs a careful revision and enlarge- 
ment, but even in its present form it has much valuable 
information for the student. 

Leroy-Beaulieu, Paul, Essai sur la repartition des richesses 
et sur la tendance k une moindre in^galit^ des conditions. 
4th ed. Paris, 1896. Takes an extremely optimistic 
view of the forces at work in distribution, maintaining 
that inequality in economic conditions is diminishing. 

Mayo-Smith, Richmond M., Statistics and Economics. 
New York, 1899. Bk. Ill, Distribution. This is a care- 
ful and critical statistical examination of the distriliution 
of wealth. Professor Mayo-Smith criticises the results 
reached by Dr. Spahr, and the two books should be read 

Pareto, Vilfredo, Cours d' Economie Politique. Lausanne 
and Paris, 1897. Vol. II, Bk. Ill, Ch. I. Treats the 
subject of distribution mathematically. 



The chief modern industrial problem is often 
stated to be the distribution of property. What is 
wanted is widely diffused property, and it is desired 
to bring about this wide diffusion without injustice, 
and without injury to the springs of economic 

Many proposals are brought forward which aim 
to produce a more general prosperity. Two of the 
best known are the single tax and socialism. These, 
however, apart from all other considerations, en- 
counter the strongest obstacles to their introduction 
because they are so adverse to powerful private 
interests. Wise social reform will always seek for 
the line of least resistance. It is granted that the 
end proposed by socialism and the single tax is 
desirable in so far as it contemplates a wide distri- 
bution of wealth,^ but before committing ourselves 
to any extreme doctrines it is well to ask. What 
can be done without radical change ? — in other 
words, what can we accomplish in order to ameli- 
orate the condition of the masses without departure 

^ This does not mean an indorsement of the particular sort of 
distribution advocated either by socialism or the single tax. 


Ht^lxoxa the fundamental principles of the existing 
social order? When we reflect upon it, we find 
that there are many things, and that these are 
quite sufficient to occupy the thoughts and energies 
of well-wishers of their kind for a long time to 

What can be done by a regulation of inheritance 
to change the distribution of property, and conse- 
quently of the opportunities and income which 
property affords ? Once in a generation nearly all 
property changes owners, and that makes possible 
the greatest changes within half a century. There 
is a perpetual flow of property from the dead to 
the living, and it is not difficult by means of law 
to exercise a decided influence over this current. 
When we attempt to bring about reform and 
improvement by a wise regulation of inheritance, 
we have a solid basis of experience to help us. 

The regulation of inheritance is a much larger 
question than the mere taxation of inheritance. It 
implies, first of all, the formulation of rules to deter- 
mine the passage of property from the dead to the 
living. It must be decided, on the one hand, who 
are heirs and how the property is to be divided 
among them, where there is no will or testament ; 
and then, on the other, the law must determine 
what kind of limitations are to be placed upon the 
right to dispose of property by will and testament. 
Provisions of this kind have in themselves a remark- 
able influence upon the distribution of wealth. A 
law providing that property must be distributed 



equally among all children, and a law of primogen- 
iture which favors the oldest son, will produce very 
different results in wealth distribution, inasmuch as 
they operate continuously and silently year after 
year. France is an example of the influence of the 
operation of a law of the first kind, and England 
illustrates the influence of primogeniture. Other 
forces have doubtless been at work in both coun- 
tries, but there can be no doubt that the wider 
distribution of property in France is due in consid- 
erable measure to the direct action of the law, and 
also to the influence of the law upon public opinion. 

Another part of such legislation which naturally 
suggests itself is the taxation of the estates of de- 
cedents, and such estates are taxed to a greater or 
less extent in nearly all — perhaps in all — great 
modern nations. We may mention England, Aus- 
tralia, New Zealand, and Switzerland as countries 
with particularly instructive experience in the tax- 
ation of inheritances. Pennsylvania, New York, 
and Illinois are three prominent states in our Union 
among twenty-six, which have inheritance taxes. 
Three of the countries named, Australia, New 
Zealand, and Switzerland, have taxation of inheri- 
tances which amounts to a conscious attempt to 
influence the distribution of property. 

Some one at this point may interrupt with the 
objection, "You are proposing measures which 
impair the rights of private property.*' The objec- 
tion is not valid. The right of inheritance is one 
right, and the right of private property is another 

T 273 


and a distinct right. He has made but little prog- 
ress in the fundamental principles of jurispru- 
dence who does not see how clearly separate are 
these two rights. The right of property means an 
exclusive right of control over a thing, but the right 
of inheritance means the transfer of this right in 
one manner or another. If there is no will, it means 
the right of some one to succeed to property, and 
this right is a product of positive law. If a will is 
made, the right of inheritance means not an exclu- 
sive right of control vested in a person, but the 
right of a person to say who, after his death, shall 
exercise the rights of property over things which 
were his while he was living. But the dead lose 
all rights of property, because proprietary rights 
inhere in the living alone. Blackstone in his Com- 
mentaries on the Laws of England clearly discrim- 
inates between the rights of property and the rights 
which we lump together under the designation 
inheritance. He says : " Naturally speaking, the 
instant a man ceases to be, he ceases to have any 
dominion : else if he had a right to dispose of his 
acquisitions one moment beyond his life, he would 
also have a right to direct their disposal for a million 
of ages after him : which would be highly absurd 
and inconvenient. All property, must, therefore, 
cease upon death, considering men as absolute 
individuals unconnected with civil society. . . . 
Wills, therefore, and testaments, rights of inheri- 
tance and succession, are all of them creatures of the 
civil or municipal laws, and accordingly are in all 



respects regulated by them ; every distinct country 
having distinct ceremonies and requisites to make a 
testament completely valid ; neither does anything 
vary more than the right of inheritance under differ- 
ent national establishments." Blackstone says it is 
an erroneous principle to suppose that "the son has 
by nature a right to succeed to his father's lands," 
or that the owner "is by nature entitled to direct the 
succession of his property after his own decease." 

The opinions of our ablest state courts and of 
the Supreme Court of the United States have been 
in entire accord with Blackstone's view, and in the 
two most important cases which have come before 
them, their decisions have turned upon the dis- 
tinction between the right of property and the 
right of inheritance. The first of these cases 
involved the constitutionality of the law of Illinois, 
dated June 15, 1895, which imposed a tax on 
estates of decedents, increasing in a general way 
as relationship of those inheriting the property 
becomes more distant, and as the amount inherited 
becomes larger.^ The decision of the Supreme 
Court of Illinois in upholding the law, included the 
following language : — 

"The right to inherit and the right to devise being 
dependent on the legislative acts, there is nothing in the 
constitution of this state which prohibits a change of the 
law with reference to those subjects, at the discretion of 
the law-making power. 

1 In case of the more distant relatives, the estate as a whole 
determines the rate and not the share received by each one. 



"The law of descent and devise being the creation of the 
statute law, the power which creates may regulate and may 
impose conditions or burdens on the right of succession to 
the ownership of property to which there has ceased to be 
an owner because of death, and the ownership of which 
the state then provides for by the law of descent or devise. 

" The imposition of such a condition or burden is not a 
tax upon the property itself, but on the right of succession 
thereto. To deny the right of the state to impose such 
a burden or condition is to deny the right of the state to 
regulate the administration of a decedent's estate. . . . 

" When by the act of June 15, 1895, for the taxation of 
gifts, legacies, and inheritances in certain cases, the legisla- 
ture prescribed that a certain part of the estate of the de- 
ceased person should be paid to the treasurer of the proper 
county, for the use of the state, it was in effect an assertion 
of sovereignty in the estate of the deceased persons. 

"Whether to be levied and determined as a tax or 
penalty, the principle is that where one owning an estate 
dies, that estate is to be assessed in accordance with 
those provisions of the act, and the tax to be paid for the 
right of inheritance. The amount reserved to the state 
from the estate of a deceased owner is not a tax on the 
estate, but on the right of succession. . . . 

" That statute provides that certain classes of property 
which was a part of an estate, shall be exempt from tax- 
ation under these conditions, and when the legislature 
provides other classes of property, some of which shall 
pay $1 per $100, others $2, others $3, and others $4, and 
still others $5, and again others $6 per $100, six different 
classes are created, under and hy which a tax is levied 
by valuation on the right of succession to a separate class 
of property. 



"The class on which a tax is thus levied is general, 
-.uniforni, and pertains to all species of property included 
within that class. A tax which affects the property 
within a specific class is uniform as to the class, and there 
IS no provision of the constitution which precludes legis- 
lative action fi-om assessing a tax on that particular class. 

" By this act of the legislature six classes of property 
are created heretofore absolutely unknown. It is those 
classes of property depending upon the estate owned by 
one dying possessed thereof, which the state may regu- 
late as to its descent and the right to devise." ^ 

It is thought worth while to quote from this 
decision at some length, as the principles involved 
are so fundamental and so far-reaching. An ap- 
peal to the Supreme Court of the United States 
was taken, and the decision sustained the Supreme 
Court of the state.^ 

The second of these two cases involved the con- 
stitutionality of the Federal War Revenue Act of 
1898, imposing an inheritance tax on personal 
estates exceeding in value i!io,ocx); the rate in- 
creasing as relationship becomes more distant, and 
as the property inherited becomes larger, ris- 
ing to 15 per cent in case of estates exceeding 
$ 1 ,000,000, inherited by distant relatives or stran- 
gers in blood. The constitutionality of the law 
was contested because, among other things, it was 
claimed that the tax was a direct tax on property, 
which is prohibited by the Constitution of the 

1 Kochersperger v, Drake, 47 N. E. Rep. 321. 167 IH. 122. 
? Magoun. V, Illinois Trust and Savings Bank,, ijp U.S. 283. 



United States. The Supreme Court of the United 
States held that an inheritance tax is not a tax 
on property, but a tax on the right to receive prop- 
erty, and is, therefore, not a direct tax when 
regarded from the standpoint of the Constitution.^ 
The right of private property in itself is not an 
unlimited one, but is limited and regulated to an 
increasing extent by all modern nations. Let one 
but think what this right implies. It implies, 
among other things, my right to fence in a certain 
portion of the earth's surface, and to exclude 
others from it and use it as I see fit, subject only 
to such general regulations as may exist to prevent 
the abuse of private property, or to secure the 
public interest. These regulations, however, as 
they are general in character, must always leave 
untouched many gross abuses. But when we 
come to the claim that my right of disposing of 
property by last will and testament is practically 
unlimited, it means not only my right to regulate 
the use of certain portions of the earth's surface, 
or claims to certain portions of other valuable 
things in this earth during my lifetime, but for all 
future time. There are those, indeed, who go so 
far as to hold that a man may establish certain 
regulations for the use of property after he is 
dead and gone, and that these regulations must be 
binding upon all future generations. Could any 

1 Knowlton v. Moore, 178 U.S. 41. The court held that "it is 
the power to transmit or the transmission from the dead to the liv- 
ing on which such taxes are more immediately vested." 



claim be more monstrous ? It is in itself the ex- 
tremest radicalism. 

Nothing illustrates better the changing ideas 
and practices concerning inheritance than this 
right to make a last will and testament. Sir Henry 
Maine, in his " Village Communities," says, " The 
power of free testamentary distribution implies 
the greatest latitude ever given in the history of 
the world to the volition or caprice of the indi- 
vidual." The right of making a will is one which 
has not been generally recognized, it is safe to say, 
during the greater part of the world's history. 
Probably the vast majority — say, as a rash guess, 
nineteen-twentieths — of the human beings who 
have ever lived have not known this right. There 
is a legal maxim of the old Teutonic law which 
prevailed among our ancestors to the effect that 
" God, not man, makes heirs." This old Teutonic 
law provided that a man's property should pass 
to his family, and this he could not prevent if he 
would. This has been the most common regula- 
tion of inheritance. The Roman law in the pro- 
cess of its development finally brought in the right 
of free testamentary disposition of property — a de- 
velopment of individualism in keeping with many 
other parts of this law. The Roman law, however, 
had no sooner established the right of a man to 
dispose of his property by will and testament 
than it began to limit this right, and to make these 
limitations more and far-reaching. The experi- 
ence of other countries has been similar. No 



sooner do we approach an unlimited right of dis- 
posing of property by last will and testament than 
we begin to beat a retreat. 

The modern man thinks it a thing right in itself 
that he should be able to tell what shall become of 
his property after his death, but millions of human 
beings have lived and died who have thought it a 
thing right in itself that the laws of inheritance 
should exclude the right to make a will. This 
merely illustrates the changing, fluctuating ideas 
concerning inheritance. In Virginia for some time 
after our Revolutionary War, the right of the 
eldest son to receive a double portion of his fath- 
er's estate obtained, and it was spoken of as 
" being according to the law of nature and the dig- 
nity of birthright." As a matter of fact, the laws 
of inheritance direct the disposition of most prop- 
erty, and they gradually so form our opinions that 
we look upon what they provide as naturally right, 
although they provide one thing in one country 
or state, and another thing in another country or 
state. It has been said that even when wills are 
made in modern times they, as a rule, do little 
more than carry out the provisions of the law. 
Perhaps there is no department of life in which 
law has a greater effect upon public opinion. 

If it is the function of the law to regulate in- 
heritance, what should be the purpose of the law } 
We may say that the law has four purposes. The 
first one of these purposes is to maintain a regime 
of individual property. The owner of property 



dies, and it has to be determined who shall succeed 
him and carry on his economic activity in the use 
of his property. It is possible gradually to intro- 
duce the public ownership of property by limiting 
the right of individuals to receive property which, 
through death, ceases to have owners. This is 
indeed the most conservative and least painful way 
to inaugurate socialism; but we who believe in 
private property and private production must, 
in the regulation of inheritance which we favor, 
have in view measures which will maintain private 
property and private production, although we may 
favor a larger public ownership and a larger public 
production in various fields of industry and attempt 
to bring this about through our regulation of in- 

The second purpose of the law must be to 
gratify the wish of the individual to direct the 
disposition of his property after his death. This 
must be held to be something subordinate, but at 
the same time we should not neglect that justifiable 
and socially beneficial sentiment which has an 
affectionate regard for the wishes of those who 
have passed over to the great majority, in so far 
as we may do so without injury to the living. 
The point is that we must remember that the dead 
have no legal rights, and that we should not allow 
their wishes to interfere with the well-being of the 
living. This is too large a subject to discuss 
further in this place; and a further discussion, 
indeed, is scarcely needed for present purposes. 



The third purpose is the welfare of society in 
general, and under this head we may say that the 
preservation of small properties is important, and 
that that idea of justice which demands that a 
person should make a fair return for that which 
he receives is one which ought to be kept in view. 

The fourth purpose relates to the family. Rev. 
Samuel W. Dike, who has made the study of the 
family as a social institution a specialty, complains 
that our laws neglect to treat the family as such, 
and to provide for its welfare.^ This is true. 
The modern legislator does not stop to ask the 
effect of proposed measures upon the family as an 
institution. Frequent divorces, of which we hear 
so much, are only one manifestation of this general 
neglect, the fruit of radical individualism. We 
have done one thing in the United States, — we 
have made careful provisions for the rights of the 
wife in the property of her husband. The law 
generally provides that the wife shall inherit a 

1 Dr. Dike is corresponding secretary of the National League for 
the Protection of the Family. The aim of this league, as stated 
in its constitution, is as follows : " Its object shall be, through the 
improvement of public sentiment and legislation, to protect the 
institution of the family, especially as affected by existing evils 
relating to marriage and divorce, and to secure its proper efficiency 
in individual and social life." The officers of the league include 
prominent men of character and standing throughout the country. 
The address of the corresponding secretary is Carbondale, Massa- 

Such a matter as that of the influence of the laws of the inheri- 
tance of property upon the family could be very well taken up by 
an organization of this sort. 



third of the husband's estate,^ and no will can 
lessen the wife's legal share. This is a far-reach- 
ing limitation of the right of making a will. ,. But 
even when providing for the wife, the legislator 
seems to have regarded her rather as an individual 
than as a part of the family. Other laws concern- 
ing members of the family support the view that 
the provision made for the wife is made for her as 
an individual rather than as one in the family. 
The right of the husband to inherit from the wife 
does not appear to have been carefully worked out 
in our states. The husband has what is known in 
common law as courtesy, which entitles him to a 
life interest in all the wife's real property of which 
she died seized, provided there are children of the 
marriage born alive. But the wife by will may 
cut off this right of courtesy absolutely, and alienate 
all her lands. Cases have fallen under the author's 
observation in which great injustice has been 
worked by this limitation of a husband's rights. 
Twice he has known cases where men in their old 
age have been deprived of the enjoyment of the 
property of a deceased wife, owing to the machina- 
tions of the wife's relatives. In one of these cases, 
a large part of the value had been given to the 
property by the efforts of the husband, and in 
the other it had originally belonged to the husband, 

1 It is not necessary here to go into such details as the difference 
between personal property and real estate, involving a difference 
between full property and life use, nor into all the variations which 
exist in different parts of the Union. 



and was transferred to the wife to gratify her 
whim. In the first case the old man was deprived 
of a home when he was too advanced in years to 
• earn a livelihood; in the latter the husband was 
able to effect a compromise, giving him a life 
interest in his deceased wife's property. These 
are simply illustrations, but they confirm the view 
that this question of a husband's rights to the 
property of a deceased wife has not been treated 
from the standpoint of the family. There has 
been nowhere in the United States adequate provi- 
sion for children, although it might be supposed 
that their claims would be superior even to the 
claims of a wife. A wife enters into relation with 
her husband when she is an adult, freely and volun- 
tarily ; but children have no choice about the re- 
lationship into which their parents bring them. 
The laws of some countries provide that a child 
must receive a certain share of the estate of a 
parent, and that this cannot be willed away. This 
share is called in the Roman law " legitima portio," 
— legitimate part, — but the German law has a 
better designation for it, " Pflichttheil " — duty 
part. The laws of France provide that a father 
with children may will away only a minor portion 
of his estate, and that the bulk of his property must 
be divided equally among all the children. The 
details of the law may vary, but it is contrary to 
the fundamental principles of the law to neglect 
to provide for children in the laws of inheritance. 
Those who are responsible for having brought 



children into the world may not presume to dis- 
inherit them. A parent's duty is to do all in his 
power to give his children the training and oppor- 
tunities which will enable them to lead happy and 
useful lives. It is not, however, desirable that 
children should be placed in such a position that 
self-exertion is rendered needless, and should we, 
in the United States, establish the principle of the 
"duty part** for children, even in the case of 
the richest parent it should scarcely exceed fifty 
thousand dollars for each. There may also be 
special reason, in the case of small estates, why 
all the property, or by far the larger proportion, 
should go to one child to the exclusion of others. 
More will be said presently about cases where 
there is good ground for giving one child pref- 
erence, and provision should be made whereby, for 
good and sufficient reason, the rule of the " duty 
part'* need not apply. Practical details would 
be difficult to work out, but probably no more 
difficult than many other details in a well-elabo- 
rated code governing the inheritance of property. 

The rest of the estate, after providing for wife 
and children and after satisfying the claims of the 
state, should be left subject to free disposition. 
When no will is made, the rule according to which 
property is divided among wife and children in 
this country is perhaps tolerably satisfactory; but 
suppose a man dies making no will, and has only 
collateral relatives. What should be their legal 
claim upon the estate ? The modern laws which 



provide that even distant relatives may inherit the 
property of intestates are survivals of an earlier 
period, when large family groups lived together 
and formed a kind of family partnership under 
the authority of the patriarch. When a man died 
under such circumstances, it was only natural that 
his property should pass to the family or the clan, 
itself but a larger family, for all were united to- 
gether by ties of interest and affection. There 
was a correspondence between rights and duties. 
But what is the case at the present time.? The 
peculiar ties which bind together distant relatives 
are practically unworthy of consideration. Rights 
and duties ought to be coordinate, but distant rela- 
tives recognize no special duties toward one another, 
and do not think about their common relationship 
unless there is some property to be inherited from 
a distant rich relative, for whom they care nothing. 
When they are heirs, they are, to use a fitting 
German expression, "lachende Erben** — laugh- 
ing heirs. In the absence of a will, there is posi- 
tively no reason whatever why any one should 
inherit from a third cousin. The family reason 
does not cover the case, because family feeling 
does not in our day extend so far, and, indeed, 
there is no reason why it should. The right of 
inheritance, so far as relatives are concerned, 
should reach as far as the real family feeling does, 
but no farther. Intestate inheritance should in- 
clude, perhaps, those who are nearly enough related 
so that they can trace descent from a common 



great-grandfather, but none who are more distantly 
related. This allows second cousins to inherit 
from one another, but not third. It allows that 
one may inherit from a great-uncle, but not from 
a great-great-uncle, and so on. Any provision for 
a more distant relative should be made by will, 
just the same as provision for any one who is not 
related at all. All property which is not willed 
away and does not fall to some heir recognized by 
law should fall to the state as the ultimate heir. 

The right of disposing of property by will and 
testament may be left intact — and should be so 
left, in the public interest — with the limitations 
mentioned. After all legally recognized claims 
are satisfied, it is beneficial rather than otherwise 
to allow a person to dispose of the rest of his estate 
by will, although it should be clearly recognized 
that this is a matter over which the law has con- 
trol, and that no human being has any right to 
say what shall take place on this earth, or what 
use shall be made of anything he may leave, after 
he is dead and gone. It may very well happen 
that there are persons with moral claims upon a 
man who are not connected by ties of blood, or 
not nearly enough related to inherit property 
according to the laws of intestate inheritance. 
The only way to make provision for such special 
cases, which justice or gratitude may point out, 
is by will. It may also happen, as we have 
seen, that among the legal heirs there may be 
particular reason why one should be selected as 



the recipient of more than a proportionate share 
of the property. 

Take the case of four or five brothers, one of 
whom is a cripple, the others strong, active, and 
capable — what could be more just than that the 
unfortunate one should receive a larger share than 
the others ? It may also happen that of three or 
four daughters, one has married a poor man and 
the others wealthy men, and the father may see 
good reason for equalizing their conditions. A 
thousand and one cases arise in daily life for which 
individual provision must be made, as they do not 
fall under the general rule, and the law cannot 
provide for them. Persons of means may also 
properly enough leave property to educational and 
charitable institutions. The right to dispose of a 
portion of property by will tends to the encourage- 
ment of energy and thrift. 

All inheritances of every sort should be taxed, 
provided the share of an heir exceeds a certain 
amount. The state or the local political unit — as 
town or city — must be recognized as co-heirs en- 
titled to a share in all inheritances. A man is 
made what he is by family, by town, or the local 
political circle which surrounds him, and by the 
state in which he lives, and all have claims which 
ought to be recognized. Taxation of inheritance 
is the means whereby this claim of the state and 
town may secure recognition. It should, however, 
be borne in mind that it is a peculiar tax, and rests 
upon a different basis from the ordinary tax. The 



justification which appeals most strongly to many 
thinkers is that the political organisms are co-heirs. 
There are, however, many different standpoints 
from which the taxation of inheritances can be 
justified, and care must be taken not to press this 
view too far. It is valid within limits, but it is not 
an exclusive doctrine, for there is truth in other 
views which have been advanced. 

Property which comes by inheritance is fre- 
quently looked upon as an income received with- 
out toil. In so far as this is true, it is for the one 
receiving it an unearned increment of property, 
and on this account may properly be taxed. The 
most satisfactory basis on which property can rest 
is personal toil and exertion of some kind; and 
when property comes otherwise than as a return 
for social service, a special tax finds a good solid 
basis in justice. 

The view that property received by inheritance 
is to be regarded as income, and an income 
which is unearned, is inadequate, inasmuch as it 
does not conform to the facts in many cases. It 
fails to recognize the activity of the wife and also 
of other members of the family in the accumula- 
tion of property, particularly in the case of small 
or moderate estates. The wife very frequently 
helps to earn the common property of husband 
and wife. This is the rule in the case of families 
having small or moderate fortunes. Every one 
will be able to mention cases which have come 
within his observation where the wife is entitled 
u 289 


to the greater part of the credit for all the prop- 
erty that has been saved. It is easy to find far- 
mers, grocers, and small tradesmen whose wives 
and children all work together in the accumula- 
tion of property. Even where the wife does not 
so actively participate, she may be present in the 
thought and mind of her husband in the accumu- 
lation of property, and be a powerful incentive to 
accumulate. She then participates in the accumu- 
lation through the bond of affection. It is rather 
in the case of those outside the immediate family 
circles, as well as in the case of large estates, that 
we can regard inheritance of property as the " ac- 
cidental or fortuitous receipt of property,** that is, 
"accidental income.** The distinction which has 
been drawn between the various views to be taken 
of inherited property has an important bearing upon 
the amount of property which should be exempted 
from taxation, and also upon the rate of taxation. 
It generally happens, perhaps universally, that 
a large property does not pay its fair share of 
taxes during the lifetime of its owner, and the tax 
upon estates when their owners die may be re- 
garded — if it is not too large — as a payment of 
back taxes. It is notorious with us that personal 
property bears relatively a very small proportion 
of the burdens of government, and it has been 
proposed that the ordinary property tax on per- 
sonal property should be abolished, and that in 
the place thereof there should be substituted a 
tax on all estates of decedents in so far as they 



consist of personal property. These, however, 
are grounds only for a limited tax, which, in the 
case of the personal property, ought to be added 
to the regular inheritance tax, if personal property 
is otherwise exempt from taxation. New York 
State has an inheritance tax of one per cent 
on personal property, which seems to have been 
imposed in view of the failure of personal property 
to bear its due share of taxes. It has been im- 
posed, however, while still retaining the general 
property tax which applies to personal property 
as well as real property. It is in this way not a 
legitimate tax, nor one which works with perfect 
justice, inasmuch as there may be supposed to be 
variations in the degrees to which personal prop- 
erty escapes taxation. The thought expressed in 
this chapter is that a small tax on personal estates 
of decedents should be in lieu of the taxation of 
miscellaneous forms of personal property, such as 
furniture in homes, personal notes, etc. 

The taxation of inheritances should be gradu- 
ated, the tax increasing as the relationship be- 
comes more distant, and as the property becomes 
larger. The taxation, however, should be calcu- 
lated on the share received, and not on the estate 
as a whole, and that for two reasons. 

The first is that this gives equality among the 
recipients of property, in so far as they belong to 
the same class. If the rate is based upon the 
estate as a whole, the nephew of one man receiv- 
ing 1? 10,000 might be obliged to pay twice as high 



a tax as the nephew of another man receiving 
$10,000, on account of the greater size of the 
estate as a whole in the one case than in the 
other. Another reason why the tax should be 
calculated on the share received is that in this way 
a wide distribution of property is encouraged. A 
very rich man can divide his property into so 
many shares that the tax paid will be relatively 
small, being imposed at one of the lower rates. 
Our courts have favored the determination of the 
rate by the amount of the share received, rather 
than by the amount of the estate as a whole. The 
Supreme Court of Wisconsin in 1902 declared a 
progressive taxation of inheritances unconstitu- 
tional, because the progression was based upon 
the estate as a whole and not upon shares received. 
The court held that this was contrary to the rule 
of equality, inasmuch as those who belonged to the 
same class were taxed at different rates.^ The 
United States Supreme Court so interpreted the 
War Revenue Act of 1 898 as to base the progres- 
sion upon shares received rather than upon the 
amount of the estate as a whole, although the offi- 
cers who had administered the law, up to the time 
of the decision of the Supreme Court, held that 
the progression was based upon the estate as a 
whole. The law of Illinois grants exemptions to 
limited amounts of property from the tax. This 
exemption is $20,000 in the case of direct inheri- 
tance, or inheritance by husband or wife, and the 

1 Black V. State, 89 N.W. 522, 113 Wise. 205. 


tax is levied only upon the excess of ;(i20,ooo 
received by each person. When we come, how- 
ever, to the more distant relatives and strangers in 
blood, we find a progressive rate, and the progres- 
sion depends upon the size of the estate as a 
whole, and not upon the share inherited. 

The tax rises to 20 per cent of the estate in 
some of the Swiss cantons, to 13 per cent in 
New Zealand, and to 10 and 15 per cent in some 
other countries. Before the federal taxation of 
inheritances was abolished in 1902, a tax as high 
as 21 per cent could be levied upon estates in 
Illinois. This would apply to very large personal 
estates inherited by distant relatives who would 
have to pay a federal tax of 15 per cent, and a 
state tax of 6 per cent. It would seem that at 
the present time the variation in the rate from 
I per cent to 20 per cent is sufficient, establishing 
20 per cent as the maximum. Possibly a time may 
come when public opinion will be more enlight- 
ened, and a higher maximum would be desirable. 
Mr. Andrew Carnegie is willing to see a tax rate 
of even 50 per cent, and advocates such a high tax 
on estates of decedents on social grounds. It will 
probably be a long time before so high a tax would 
meet with general approval, but we know that a 
tax of 20 per cent works well. 

It is a rule that a certain amount of property 
should be exempt from inheritance taxation. This 
amount is one which should vary greatly. We 
have already seen that, in the case of the imme- 



diate family, provided the estate is a moderate one 
in amount, say $50,000, the property inherited is 
not to be looked upon as income. It should be re- 
garded as a capital sum which is designed to yield 
income. This gives us a principle which we can 
use in calculating the amount of the exemption. It 
should be a capital sum which would yield an in- 
come which ought to be exempt in the case of a 
general income tax. If $600 is a very moderate 
exemption in the case of an income tax, we can then 
ask what sum will yield $600. If property yields 
5 per cent, the sum is ;J> 12,000, and that would seem 
to be a very moderate exemption in the case of the 
widow. The author knows of no more carefully 
worked out till for the taxation of inheritances than 
that which has been presented to the legislature of 
Wisconsin, in the present year, by the Wisconsin 
State Tax Commission. The amount of exemption 
which is provided for by this bill is jj 10,000 in the 
case of the widow, and in the case of the husband, 
lineal issue, lineal ancestor, adopted or mutually 
acknowledged children, ;?2000. The amount ex- 
empted falls rapidly in the case of collateral heirs, 
the highest exemption being $500. It would seem 
that the Tax Commission has adopted the view 
that as soon as we pass outside the immediate 
family, the inheritance is to be looked upon as 
income, and as unearned income. 

The celebrated Professor Bluntschli of Heidel- 
berg laid down these proposals for a reform in 
the laws of inheritance. 



First, the share of a child is not to be taxed 
unless it exceeds J!24,ooo, but of any excess above 
;fi24,ooo the local political unit (which, for the sake 
of brevity, we will hereafter call town, in every 
case) shall receive lo per cent. If the share of 
a child exceeds $120,000, the state shall receive of 
the excess above $120,000, a child's share. 

Second, if the estate falls to parents or grand- 
parents of the decedent, the town is to receive a 
share of 5 per cent of the estate, provided the 
share of a single ancestor is more than $2400, but 
does not exceed $12,000, and 10 per cent of the 
excess of a share over $12,000. If the share of a 
single ancestor exceeds $24,000, the state receives 
a share equal to 10 per cent of the surplus. 

Third, the brothers and sisters and children of 
brothers and sisters of decedents are to be treated, 
so far as inheritance goes, like parents and grand- 

Fourth, if the heirs of the decedent are descended 
from grandparents, but not from the same parents, 
— that is to say, if they are cousins, aunts, and 
uncles, — the town is to be entitled to a share of 10 
per cent of the estate, if this exceeds $2400, and 20 
per cent of the excess of the estate above $12,000. 
If the estate exceeds $24,000, 20 per cent of this 
excess is to go to the state, and not to the town. 

Fifth, if the heirs of the decedent are descended 
from common great-grandparents, but not from 
common grandparents or parents, the share of the 
town is to be 20 per cent if the estate exceeds 



$2400, and 30 per cent of the excess above i! 12,000, 
and if the estate exceeds $24,000, the state is to 
receive 30 per cent of this excess. 

Sixth, if the decedent has no relatives near 
enough to be descended from common great-grand- 
parents, the estate is to fall to the town if it does 
not exceed in value $12,000, but if the value is 
greater than this, the entire surplus above $12,000 
is to fall to the state. 

Seventh, if the decedent leaves a husband or 
wife, the survivor is to have a life interest in the 
share of the town or state. 

Bluntschli proposes that this property acquired 
by the local political units and the state should be 
used as a fund to support institutions especially 
designed to promote the interests of the property- 
less classes, also that it should be used to reward 
persons who have distinguished themselves in 
science or in art, or who have rendered especially 
valuable service to the poorer classes of society. 
He is unwilling to allow a diversion by will of that 
portion of the estate which falls to the town or 
state, but he is willing to allow a person to direct 
that that portion which belongs to the town or 
state as " duty part " {PJltchtt/ieil) should be made 
over to charitable or benevolent or educational 
foundations, provided town and state give their 
approval, and he is also willing that the testator 
should give survivors a life interest in that part 
of the estate which must ultimately fall to town 
or state. 



These proposals of Bluntschli seem eminently 
wise and conservative, and while it may be desir- 
able to alter them in details, they furnish an excel- 
lent basis for discussion. 

The use to be made of the funds acquired by the 
taxation of inheritances, and by establishing the 
co-heirship of town and state, must vary according 
to time and place. Bluntschli would have this prop- 
erty used to provide large estates for persons who 
have rendered signal service to the state. There is 
precedent enough for this in European states. Bis- 
marck was given a fortune after the Franco-Prus- 
sian War, and England has conferred fortunes upon 
great generals. While such a disposition of prop- 
erty to create great and powerful families may 
perhaps be proper enough in Germany, it would be 
altogether unsuitable for our country. There are, 
however, many uses which suggest themselves. In 
cases of cities, towns, and states weighed down with 
debt, the payment of bonds would be an excellent 
employment of the funds. In case taxes are extraor- 
dinarily high and weighing down industry, the pro- 
ceeds of all, or at least a part, of the inheritance tax 
could be used to reduce the ordinary tax rate. But 
there are very few places in the United States where, 
apart from inheritance taxation, a properly devel- 
oped tax system would not provide for all present 
expenditures of government without overburdening 
any one. There are, however, great improvements 
which it is desirable to carry out, and these funds 
could be used to effect improvements which cost too 



much to be defrayed out of the ordinary taxatioa 
The states of the Union, and many of the towns, 
ought to go into forestry, purchasing large tracts 
of land, especially on mountains and along river 
courses, and covering these with trees. States and 
cities have allowed the ownership of valuable public 
works to slip away from them into the hands of pri- 
vate corporations. Waterworks, gas-works, street- 
car lines, and the like, might be purchased and 
operated at cost.^ All great cities require a larger 
number of parks, especially of small parks in the 
crowded sections. Sanitary measures may be men- 
tioned, and some of these are expensive. They, 
however, lower the death-rate and improve the 
health of the community. There are many cities 
which ought to buy slums and tear down the houses 
in them. The city of Birmingham, England, bought 
a large tract of land in the centre of the city, which 
was the worst slum region in it, and tore down all 
the houses. It then leased the land for a limited 
term of years, to be built up with houses according 
to plans and specifications laid down. The result 
has been a remarkable improvement in the city, and 
it is said that when these leases fall in, Birming- 
ham will be one of the richest, if not the richest, 
municipal corporation in the world.^ 

1 Some other plan would perhaps be better. This is intended 
simply as a suggestion. 

2 This undertaking is admirably described by Dr. Albert Shaw 
in his "Municipal Government in Great Britain," Ch. IV, "Bir- 
mingham : its Civic Life and Expansion." 



London has decided to undertake a similar im- 
provement, but it is stated that in the case of 
London this will involve great expense. School 
:unds ought to be increased until they become 
freat enough, with the aid of current taxation, to 
provide the entire population with the best educa- 
ional facilities of every sort, including manual 
raining, kindergartens, public libraries, universi- 
ies, industrial museums, art galleries, and the like. 
;t would be especially desirable to improve the 
ichools in the rural communities, establishing good 
ligh schools wherever the population is sufficient 
o furnish them with pupils. Good schools in the 
:ountry districts would tend to keep people in the 
lountry, for now many leave the country and go to 
he cities purposely to educate their children. It is 
m every account desirable to make the country 
jleasanter and more attractive as a place of abode. 
\nother fund may be suggested as suitable to be 
iccumulated out of property inherited by the state 
md town, and that would be a highway fund, de- 
signed to help to improve the streets and roads of 
the state. The income of this fund could be dis- 
tributed to towns and counties in such a manner 
as to encourage them in the improvement of roads 
and streets. It might be provided, for example, 
that for every two or three dollars expended by 
the local political unit, one should be granted from 
the fund. 

A few words should be added to show why it is 
preferable not to use the proceeds of inheritance 


taxation for current expenses. Other taxes are 
generally sufficient for current expenses, and soci- 
ety, like the individual, should be thrifty, and im- 
prove what may be called the general plant. This 
is only a figurative expression. The idea is, that 
the general physical environment should be im- 
proved, thereby increasing the social capital of the 
country, and that there should be an accumulation 
of those forms of wealth which are the permanent 
sources of satisfaction and enjoyment. It is well 
to set aside a special source of revenue for this 
specific purpose. Another reason why this partic- 
ular tax should be used for expenditures conveying 
permanent benefits is that, as the tax rates increase, 
we are taking from accumulated property, and not 
merely from current* income. It is highly impor- 
tant that the development of inheritance taxation 
should not carry with it a decrease in accumulated 
wealth. If an inheritance tax implied this, then it 
would indeed be what Adam Smith calls it, " an 
unthrifty tax." Up to the present there is no prob- 
ability that inheritance taxation has decreased by 
the smallest amount the accumulated wealth of any 
country. But we must look to the future, as well 
as to the present. Society as a whole, as well as 
the individual, must cultivate foresight. 

The line of reform proposed in this chapter will 
stand every test which can be applied to it. It is, 
as already mentioned, a reform which meets with 
approval wherever tried, and with increasing ap- 
proval the longer it is tried. It is a reform espe- 



daily in keeping with democratic institutions, and 
it has succeeded best in democratic countries. 
So perfectly is it in keeping with true democracy, 
that the purer and more complete, the more cul- 
tured, the democratic countries have become in 
which this reform has been tried, the more they 
are inclined to move farther along the same line. 
It is entirely compatible with the fundamental 
principles of the existing social order, and does not 
interfere with its normal and peaceful evolution. 
It antagonizes no other line of progress, but helps 
forward every other true reform. It provides 
ample public funds when accompanied by a ra- 
tional system of taxation, and yet lays a burden 
heavy to be borne on no one. 

We may examine this reform of the laws of in- 
heritance with respect to the family, and we find 
that it tends to the development of the family as 
an institution far better than the existing laws in 
the United States. It recognizes the solidarity 
of the family. The husband is responsible to 
the wife, and the wife to the husband, and both 
are responsible for the children which they have 
brought into the world. It coordinates rights and 
duties. It may be stated, however, in this connec- 
tion, that duty should be extended among the vari- 
ous members of a family, in particular the recip- 
rocal duties of parents and children should be 
sharpened and strengthened. The duty of sup- 
port — and adequate support in proportion to means 
— should apply both to parents and to children, 



parents supporting the children in their youth, 
and children the parents in their old age. The 
various members of the family organism should 
be drawn together by an extension of duties. It 
may be questioned whether any one should have 
the right to inherit from a person, provided 
he may not under any circumstances be called 
upon to minister to his support. As Emer- 
son and the other great thinkers have long 
been saying, it is time now to stop talking so 
much about rights and to begin to emphasize 

If we look at this reform from the standpoint of 
society, we find that it stands every test to which 
it can be subjected. It diffuses property widely, 
and results in a great number of families with an 
ample competence, and tends to prevent the growth 
of plutocracy. So conservative a jurist as Mr. 
Justice Brewer of the United States Supreme 
Court expressed himself as follows to Mr. Ben- 
jamin F. Dos Passos, author of "The Law of 
Collateral and Direct Inheritance, Legacy and Suc- 
cession Taxes " : "I was not aware until such exam- 
ination of the extent to which in this country the 
matter of taxation on successions has advanced. I 
have often urged that as one of the most just 
taxes, and if it were graduated in proportion to the 
amount of property passing, I think it would be 
most beneficial. It would tend largely to prevent 
the accumulation of property in a family line, and 
to work that distribution which is for the interest 



of all." ^ It is these families, with a competence 
lifting them above a severe struggle for bare phys- 
ical necessities, which carry forward the world's 
civilizations. It is from these families that the 
great leaders of men come, and not from either of 
the two extremes of society, the very rich or the 
very poor. Excessive wealth discourages exer- 
tion, but a suitable reform of the laws of inheri- 
tance will remove from us many idle, persons who 
consume annually immense quantities of wealth, 
but contribute nothing to the support of the race, 
and who, leading idle lives, cultivate bad ideals 
and disseminate social poison. For the sake of 
the sons of the rich, as well as for the sake of the 
sons of the poor, we need a reform of the laws of 

A reform of the laws of inheritance of property 
will help us to approach that ideal condition in 
which the man that does not work shall not eat, 
and it will also tend to the equalization of oppor- 
tunities so as to give all a fairer start in life, allow- 
ing each one to make such use of his opportunities 
as his capacity and diligence permit, and thus ren- 
dering inequalities, economic and social, less odious 
and injurious, more stimulating and helpful. This 
reform tends to make income a reward for service, 
thus realizing in a higher degree than at present 
the demands of justice. It must tend indirectly to 
discourage idleness and to encourage industry, and 

' Quoted on page 65 of Second Biennial Report of the Wis- 
consin State Tax Commissiun, Madison, Wisconsin, 1903. 



to repress that gambling, speculative spirit which 
desires something for nothing, and wants to get a 
living without rendering an honest return of some 


Adams, Henry C, The Science of Finance. New York, 1898. 
Professor Adams treats inherited property as " income of 
property " as distinguished from " income from property," 
or income from service. He places the tax under the 
head of taxes on income. While the present writer has 
in earlier writings treated inherited property as income, it 
seems to him, as stated in this chapter, that a distinction 
must be made, and that while in some cases it must be 
so looked upon, in other cases such a view is not tenable. 

Dos Passos, Benj. F., The Law of Collateral and Direct In- 
heritance, Legacy and Succession Taxation. St. Paul, 
1895. A law book by a strong adherent of taxation of 

GiLsoN, Norman S., Curtis, George, Jr., Haugen, Nils P^ . 
Commissioners, Wisconsin State Tax Commission, Sec- 
ond Biennial Report. Madison, 1903. Ch. IV. Many tax 
commissions have treated the subject of inheritance taxa- 
tion, but probably it has never been treated by an Ameri- 
can tax commission more thoughtfully than in this report 

Mill, John Stuart, Political Economy. London, 1876. 
Bk. II, Ch. II. Everything which Mill writes is worth 
reading, and in his day his treatment of inheritance 
of property was a valuable contribution to the subject. 
Mill makes, however, a distinction between testate and in- 
testate inheritance which is radically unsound, and which 
has not been followed by subsequent writers. 

Seligman, E. R. A., Essays in Taxation. New York, 1 895. 
Ch. V. Professor Seligman's treatment of financial topics 
is always worthy of attention. 

Thomas, Edward A., About Wills and Testaments. The 
Forum, September, 1886. A popular and suggestive 



treatment by one who has held a judicial position, and 
who advocates a far-reaching regulation with correspond- 
ing restriction of the power to make a will and testament. 
West, Max, The Inheritance Tax. In Columbia University 
Studies. New York, 1 893. This is a valuable monographic 
treatment of the subject. 



[Prepared by the Wisconsin Tax Commission, Senate Bill 331, S. 1903.1] 

The people of the State of Wisconsin, represented in senate and assembly, 
do enact as follows : 

Section i. A tax shall be and is hereby imposed upon 
any transfer of any property, real, personal or mixed, or any 
interest therein, or income therefrom in trust or otherwise, 
to any person, association, or corporation, except corporations 
of this state organized under its laws solely for religious, 
charitable or educational purposes, which shall use the prop- 
erty so transferred exclusively for the purposes of their organ- 
ization within the state in the following cases : 

First, When the transfer is by will or by the intestate 
laws of this state from any person dying possessed of the 
property while a resident of the state. 

Second. When a transfer is by will or intestate law, of prop- 
erty within the state or within its jurisdiction and the decedent 
was a non-resident of the state at the time of his death. 

Third. When the transfer is of property made by a resi- 
dent or by a non-resident when such non-resident's property 

^ The provisions relating to amount and rates of the taxation 
proposed are given. The administrative and local features of the 
bill are omitted. 


is within this state, or within its jurisdiction, by deed, grant, 
bargain, sale or gift, made in contemplation of the death of 
the grantor, vendor or donor, or intended to take effect in 
possession or enjoyment at or after such death. 

Fourth, Such tax shall be imposed when any such person 
or corporation becomes beneficially entitled, in possession or 
expectancy to any property or the income thereof, by any 
such transfer whether made before or after the passage of this 
act, provided that property or estates which have vested in 
such persons or corporations before this act takes effect shall 
not be subject to the tax. 

Fifth, Whenever any person or corporation shall exercise 
a power of appointment derived from any disposition of 
property made either before or after the passage of this act, 
such appointment when made shall be deemed a transfer tax- 
able under the provisions of this act in the same manner as 
though the property to which such appointment relates 
belonged absolutely to the donee of such power and had been 
bequeathed or devised by such donee by will ; and whenever 
any person or corporation possessing such a power of appoint- 
ment so derived shall omit or fail to exercise the same within 
the time provided therefor, in whole or in part, a transfer 
taxable under the provisions of this act shall be deemed to 
take place to the extent of such omission or failure, in the 
same manner as though the persons or corporations thereby 
becoming entitled to the possession or enjoyment of the 
property to which such power related had succeeded thereto 
by a will of the donee of the power failing to exercise such 
power, taking effect at the time of such omission or failure. 

Sixth. The tax so imposed shall be upon the clear market 
value of such property at the rates hereinafter prescribed and 
only upon the excess of the exemptions hereinafter granted. 

Section 2. When the property or any beneficial inter- 
est therein passes by any such transfer where the amount 
of the property shall exceed in value the exemption herein- 
after specified, and shall not exceed in value twenty-five 
thousand dollars the tax hereby imposed shall be : 




First. Where the person or persons entitled to any bene- 
ficial interest in such property shall be the husband, wife, 
lineal issue, lineal ancestor of the decedent or any child 
adopted as such in conformity with the laws of this state, 
or any child to whom such decedent for not less than ten 
years prior to such transfer stood in the mutually acknowl- 
edged relation of a parent, provided, however, such relation- 
ship began at or before the child's fifteenth birthday, and was 
continuous for said ten years thereafter, or any lineal issue of 
such adopted or mutually acknowledged child, at the rate 
of one per centum of the clear value of such interest in such 

Second, Where the person or persons entitled to any 
beneficial interest in such property shall be the brother or 
sister or a descendant of a brother or sister of the decedent, 
a wife or widow of a son, or the husband of a daughter of 
the decedent, at the rate of one and one-half per centum of 
the dear value of such interest in such property. 

Third. Where the person or persons entitled to any bene- 
ficial interest in such property shall be the brother or sister 
of the father or mother or a descendant of a brother or sister 
of the father or mother of the decedent, at the rate of three 
per centum of the clear value of such interest in such property. 

Fourth. Where the person or persons entitled to any 
beneficial interest in such property shall be the brother or 
sister of the grandfather or grandmother or a descendant of 
the brother or sister of the grandfather or grandmother of the 
decedent, at the rate of four per centum of the clear value of 
such interest in such property. 

Fifth. Where the person or persons entitled to any bene- 
ficial interest in such property shall be in any other degree of 
collateral consanguinity than is hereinbefore stated, or shall 
be a stranger in blood to the decedent, or shall be a body 
politic or corporate, at the rate of five per centum of the clear 
value of such interest in such property. 

Section 3. The foregoing rates in section two are for 
convenience termed the primar}' rates. 



When the amount of the clear value of such property or 
interest exceeds twenty-five thousand dollars, the rates of tax 
upon such excess shall be as follows : 

(i) Upon all in excess of twenty-five thousand dollars and 
up to fifty thousand dollars one and one-half times the primary 

(2) Upon all in excess of fifty thousand dollars and up to 
one hundred thousand dollars, two times the primary rates. 

(3) Upon all in excess of one hundred thousand dollars 
and up to five hundred thousand dollars, two and one-half 
times the primary rates. 

(4) Upon all in excess of five hundred thousand dollars, 
three times the primary rates. 

Section 4. The following exemptions from the tax are 
hereby allowed : 

(i) All property transferred to corporations of this state 
organized under its laws solely for religious, charitable or 
educational purposes, which shall use the property so trans- 
ferred exclusively for the purposes of their organization within 
the state shall be exempt. 

(2) Property of the clear value of ten thousand dollars 
transferred to the widow of the decedent, and two thousand 
dollars transferred to each of the other persons described in 
the first subdivision of section two shall be exempt. 

(3) Property of the clear value of five hundred dollars 
transferred to each of the persons described in the second 
subdivision of section two shall be exempt. 

(4) Property of the clear value of two hundred and fifty 
dollars transferred to each of the persons described in the 
third subdivision of section two shall be exempt. 

(5) Property of the clear value of one hundred and fifty 
dollars transferred to each of the persons described in the 
fourth subdivision of section two shall be exempt. 

(6) Property of the clear value of one hundred dollars 
transferred to each of the persons and corporations described 
in the fifth subdivision of section two shall be exempt. 






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An older view than that which prevails at the 
present time looked upon public expenditures as 
not merely something unproductive, but as some- 
thing extraneous to the economic life of the people. 
We now look upon federal government, state and 
city, as agencies through which we cooperate 
for the accomplishment of common purposes. 
These purposes are either directly industrial in 
character, or they have industrial consequences. 
We must, then, in our studies in the evolution of 
industrial society give brief attention to the growth 
and character of public expenditures. An exam- 
ination of the nature of public expenditures is 
essential to a comprehension of important aspects 
of the life of industrial society. 

When we examine even cursorily the history of 
public expenditures, we are impressed by their 
enormous growth and their magnitude in present 
times. Our statistical knowledge is for many 
purposes inadequate, but in this case the movement 
has been so strong and so pronounced throughout 
the civilized world that we can take our illustrative 
material almost at haphazard. A very few figures 



tell the story, and we require no elaborate statistical 
exhibit. We will confine ourselves to modern 
nations. The ordinary expenditures of England 
in the twelfth and thirteenth centuries amounted to 
less than ;£ioo,cxx) sterling. Stubbs tells us' that in 
the thirteenth century a popular king could raise 
something under ;^200,cxx) by pressure and by using 
all possible sources of revenue at the same time. 
The financial character of the state at that time 
resembled, in many particulars, the financial char- 
acter of a great private estate, and the expenditures 
of England were less than those of some private 
households at the present time. The expenditures 
of France in the thirteenth century were also rela- 
tively a very small matter, amounting to a little over 
3,500,000 francs about the middle of the century. 
England's expenditures in 1688, at the time of the 
accession of William and Mary,amounted to ;^i,5C)0- 
000 sterling. This is about the beginning of modern 
finance. In 18 15 the expenditures of England 
amounted to ;£$ 5,000,000 sterling. Macaulay points 
out that, while England's population trebled between 
1685 and 1 84 1, the expenditures increased forty 
times. In 1828 the budget of France showed for 
the first time expenditures amounting to 1,000,- 
000,000 francs. General alarm was expressed and 
grave apprehension for the future was felt by many. 
Since that time no budget has called for a smaller 
expenditure, and in 1 860 the French budget showed 
expenditures of 2,000,000,000 francs for the first 
time, the years of war alone excepted. Since then 



the annual expenditures of France have never been 
less, and about thirty years later the budget reached 
3,ooo,ocx),cxx) francs. Now, when we include local 
expenditures, the annual expenditures of France 
are far beyond 4,cxx),cxx),ooo francs. 

The expenditures of Great Britain have gone 
on increasing in the meantime. When the na- 
tional budget exhibited expenditures, for the first 
time, in 1896, of ;^ioo,ocx),ooo sterUng, many 
Englishmen expressed grave apprehension. The 
South African War, however, has carried the 
expenditures far beyond that amount. In 1899 
they amounted to ;^io8,ocxd,ooo, and in 190 1 they 
reached the enormous aggregate of nearly £1^4,- 
000,000. These expenditures must be regarded as 
abnormal, and as due to war — a part of the price 
paid for imperialism in South Africa — but it may 
be doubted whether the English budget ever again 
touches ;^ 1 00,000,000 sterling as a low-water mark. 
A few years ago American newspapers had much to 
say about a billion dollar Congress, the appropria- 
tions of the federal government reaching that 
amount in the years 1889-1891. The Congress just 
adjourned (the Fifty-Seventh) has expended over 
1^1,500,000,000, and the preceding Congress ex- 
pended very nearly that sum. While we do not 
venture to enter into the region of prophecy, an 
examination of the growth of public expenditures 
during the past century and the laws which seem to 
underUe this growth gives us some reason to doubt 
whether we shall ever again see a Congress appro- 



priating so small a sum as jii,cxx),(XX),ooo, that is to 
say, ji500,ooo,ooo a year. Clearly we have reached 
a period in which, simply on account of their mag- 
nitude, the public expenditures must exercise an 
influence upon industrial life, for it must be remem- 
bered that we have, in addition to national ex- 
penditures, those of the intermediate and local 
governments, by whatever name these may be called 
in various countries. When Mr. William H. Van- 
derbilt left a fortune of $200,cxx),ocx) that was con- 
sidered as something of national import ; but the 
biennial expenditures of the federal government 
are more than seven times as great The opera- 
tions of the federal government alone are so vast 
that if for a short time money flows into the treas- 
ury and accumulates there, it produces a disturb- 
ance in the money market, while the effect of 
paying out money in large sums has marked influ- 
ence also. Care must be taken by a great national 
government, even in paying its debts, in order to 
avoid unfortunate industrial disturbances; it may 
be even an undue industrial expansion with a reac- 
tion later. Roughly speaking, a great modern nation 
may altogether expend something like lo per cent of 
the total social income. This means, among other 
things, the employment of a large force, and the con- 
ditions under which those who are employed by the 
government work must affect private employment. 
The present opposition of the manufacturers of the 
country to an extension of the eight-hour day from 
those who are employed directly by the federal gov- 



ernment to those who are employed indirectly, that 
is to say, those who are employed by contractors for 
the government, shows how keenly our employers 
realize the industrial relation which exists between 
public expenditures and private employment. 

When we turn from national expenditures to those 
of local political units, we find quite as marked a 
growth. Cities like Berlin and New' York have 
budgets which have grown as rapidly as those of any 
modem nation. The appropriations of New York 
City, less the state tax, rose from $1,832,462 in 1844 
to $44,035,187 in 1897.^ New York City affords an 
example of poor government, but Berlin is some- 
times called the best administered great city in the 
world. The expenditures of that city during the 
thirty years, 1861 to 1891, taking only the excess of 
expenditures over receipts from services rendered, 
increased from a little over 6,ocK),ooo marks to 
nearly 46,ooo,cxx) marks, while the population in- 
creased from 547,cxx) to a little over i,5oo,cxx). A 
good part of this entire book might be taken up 
with figures showing a similar growth. 

The question is. What does this mean ? We must 
have an answer to this question in order to under- 
stand why it is that the growth of public expenditures 
has not brought such dire evils as those which have 
been anticipated. Perhaps we cannot do better than 
to introduce an examination of the nature of this in- 

* Vide Durand's " The Finances of New York City," pp. 372-373, 
in the table, ** Budget, Taxe&, and Special Assessments from 1830 
to 1897." 



crease by a quotation of Professor Adolph Wagner's 
" Law of Increasing Public Expenditures " : — 

" Comparisons between different countries and 
different periods show regularly among progres- 
sive nations an extension of public activities. This 
manifests itself extensively and intensively. The 
state and its subordinate political units continually 
undertake new functions^ and they perform their 
duties^ old and new, better and better. In this way^ 
that isy through public agency y the needs of the popu- 
lation to an increasing extent^ especially their com- 
mon needs, are satisfied ; and the public services for 
the satisfaction of needs continually improve in 
quality. The clear proof of this is given statisti- 
cally in the increased demands made by the state and 
the subordinate political units'' ^ 

We have here described what is a part of a still 
larger movement, namely, the socialization of pro- 
duction and the socialization of consumption. It 
is, however, the socialization of consumption which 
especially confronts us in public expenditures. To 
an increasing extent what is consumed by the family 
is produced outside the family. There has been go- 
ing forward a great process of socialization, and this 
finds expression in part in public expenditures. An 
increasing proportion of the needs of the family are 
satisfied, not by the private economy, but by the 
public economy, and satisfied also, as Professor Wag- 
ner points out, not in accordance with the principles 

1 Wagner, ** AUgemeine Volkswirthschaftslehre," Erster Theil, 
Grundlegung, Kap. 4, 3 Hauptabsch., S. 310, Bd. I, 2te A. 



of private economy, which is service for service, but 
in accordance with the principles of public economy, 
which is a general return for that which is received. 
We have to do with what we may also call socializa- 
tion of supply. We do not protect ourselves against 
physical violence, but are protected by the state. We 
do not educate our own children ; they are educated 
by public agency. The public expenditures are 
also made to promote art and all the higher interests 
of life. The services which the federal government 
renders us in the post-office find expression in pub- 
lic expenditures. Public expenditures are giving 
us more beautiful and more healthful cities, and are 
satisfying the needs which arise out of the extensive 
growth of the country, in its expansion geographi- 
cally and in the size of the population, and also 
the needs which arise from an intensive growth. 

It is instructive to consider the historical order 
in which the objects of public expenditure appear. 
This order throws a strong light upon the evolution 
of industrial society, and of civilization in general. 
This is an almost unworked field of investigation, 
but it is an extremely interesting and important one. 
This order can be presented here only in the most 
general terms, and in these terms it is somewhat as 
follows : expenditures for (i) external security ; (2) 
security within the community; (3) promotion of 
material interests ; (4) benevolence (transferred in 
part from the church at the time of the Reforma- 
tion) ; (5) education in its various phases ; (6 ) labor. 
In a general way the organization of the departments 
Y 321 


of the federal government corresponds with this 
order. In 1789 the Treasury, War, and State 
Departments were organized, also the Department 
of Justice, Supreme Court, and the Navy Depart- 
ment; the Post-office Department was organized 
as a distinct department in 1829; the Department 
of the Interior was organized in 1849 > ^^^ Depart- 
ment of Labor as a separate department (without 
representation in the Cabinet) in 1888; the De- 
partment of Agriculture as a separate department 
(with representation in the Cabinet) in 1889; the 
Department of Commerce and Labor (with repre- 
sentation in the Cabinet) in 1903. The modem 
nation has been spending an increasing proportion 
of its resources for education. We use nation in 
the general sense here, including all the subdivi- 
sions of the nation. We find a rapidly increasing 
item in the budget of the modern municipality 
for public libraries, in which line of expenditure the 
United States is leading the world. Lately in the 
modern budget we find expenditures which are dis- 
tinctively for the promotion of the interests of labor. 
We must, however, analyze the public expendi- 
tures of the various departments more carefully to 
understand fully the order of development in the 
objects of public expenditures. The whole ex- 
penditure of the Department of Agriculture is an 
expenditure to promote material well-being, and 
this has become one of the great departments in 
modern government. The Department of the 
Interior is also largely concerned with expendi- 



tures to promote the general welfare. We have 
in the Department of Agriculture such items as 
forestry, food adulteration, botany, and seed tests, 
pomology, entomology, agricultural soils, irriga- 
tion investigations, road inquiry. 

It is possible to lay down no limit to the increase 
of public expenditures, because the causes are so 
multiform, and because also it is a natural outcome 
of increasing general socialization. Increased 
density of population and increased knowledge 
add to our public expenditures. Disease serves as 
an illustration. This becomes more and more a 
social matter, and is fought more and more by 
what is called public medicine. 

We cannot lay down any hard and fast line be- 
tween public and private expenditures, because there 
is a perpetual shifting from the satisfaction of wants 
privately to the satisfaction of wants publicly, and 
sometimes even, though less frequently, the reverse 
process. The railways of Prussia were once private, 
and their receipts and expenditures had little to 
do with the Prussian budget. Now the receipts 
are public receipts, and their expenditures are 
public expenditures. The addition to the budget, 
however, means necessarily no additional burden 
resting on the people. Indeed, if the people 
are well served and served for a lower price 
than formerly, with less relative cost of opera- 
tion, the burdens of the people have been 
lightened, and this is what is generally claimed in 
Prussia. Let us take the case of a city in which 



watering the streets is a private matter paid for by 
private subscription. The expenditure becomes a 
public expenditure when the city takes upon itself 
this function, but if the public expenditure is no 
greater than the private expenditure, there is no 
additional burden. If the service is better per- 
formed, and the total burden more fairly distrib- 
uted by taxation than by private subscription — 
as sometimes at least happens — there is a positive 
gain. The increased density of population has 
been mentioned as a cause of increased public 
expenditures. A suburb, without any municipal 
organization, may maintain electric lights in the 
streets by private subscription. The expenditure 
appears in no public budget. This suburb secures 
some kind of a municipal organization, and that 
which was a private expenditure becomes a public 
expenditure. Again, however, there is no in- 
creased burden resting upon the people; their 
wants are satisfied through a different channel. 

When we compare modern times with ancient 
times, we find that an increasing proportion of the 
public expenditures are incurred for objects which 
directly benefit the people, and relatively a de- 
creasing amount for objects in which they have 
comparatively little concern. This finds most 
striking exemplification in a comparison of the 
budget of France in 1789^ with the budget of 1894, 
which we take simply as a typical modern budget : 

1 Necker's "Budget," May, 1789, rearranged by the writer in 
" Dictionnaire des Finances" in order to make it better understood. 





Cost of collection and reimbursements (does 
not include cost of collecting taxes farmed 

Consolidated debt, — included portion made up 
of annuities 

Interest, etc., on remaining portion of debt 


Royal family and princes 





** This formed the total deduction before provision 
could be made for general service of the govern- 
ment,** in which we have the following items : — 



Marine and colonies 

Foreign Affairs 



Financial Administration .... 
Public Works, Agriculture, and Commerce 
Public Instruction and Fine Arts 
Public Worship ("Cultes") . 




Grand Total 


1 A livre is slightly less than a franc, — say 2 per cent. 


France, Expenditures, 1894 (Hofkalendar, 1895) 


Public debt .... 

President, salary and allowances 

Legislative bodies 

Department of Finance 

Department of Justice 

Department of Foreign Affairs 

Department of Interior 

Department of War . 

Department of Navy . 

Department of Public Instruction, Fine 
Arts, and Public Worship ("Cultes") 

Department of Commerce, Industry, and 

Department of Agriculture 

Department of Public Works 

Cost of collection and management of in- 

Reimbursements and restitutions ' 










It will be observed, in comparing these two 
budgets, that the French court consumed a very 

^ Including prisons, 17,663,878; benevolence, 7,372,000. 

2 The items : — 

Public Instruction 190451,055 

Public Worship (" Cultes ") • • • 44,224,040 

Fine Arts 8,119,145 

In 1885 the corresponding items were: — 

Public Instruction 131,993.455 

Fine Arts > 3,815,055 

Public Worship (" Cultes ") . . . 46,348,763 

• Rem hour seme fits et restitutions, 



large proportion of the expenditures of 1789; and 
that of what remained a very large proportion was 
consumed by the public debt, the army and navy ; 
and that for education and the promotion of general 
welfare the expenditure was relatively insignificant. 
A study of this table reveals one of the reasons 
why it is that France is able to endure so large 
a public expenditure. Wants are thereby satisfied, 
and what is expended returns to the people in 

Sometimes fear is expressed lest there should be 
an encroachment of public industry upon private 
industry, and this fear seems to find support in 
Wagner's treatment of the subject, when he says 
that there is a relative increase in public expendi- 
tures. An examination of the budgets and a com- 
parison of the increase in public expenditures with 
increased resources does not seem to show that the 
fear which has just been mentioned is supported 
by the facts in the case. It is impossible to give 
the statistics in the limits of the present chapter. 
The statistics, however, appear to show that private 
expenditures have in recent years increased as 
rapidly as public expenditures, and that the proper 
balance has not necessarily been disturbed. Some- 
times fear has also been expressed lest the central 
governments should expand at the expense of the 
local governments. It is thought by some that we 
are living in a period of centralization. The statis- 
tics of public expenditures do not bear this out, as 
local public expenditures seem to be increasing 



more rapidly than those of central governments. 
There may be some ground to apprehend that in 
the United States the cities and federal government 
are increasing in importance more rapidly than our 
commonwealths. The states which make up the 
Union have lost somewhat in relative significance, 
if we may judge from the comparison of public 
expenditures of the various political units. ^ There 
appears to be, however, some ground for thinking 
that the states are again becoming of greater im- 
portance in our general structure of government. 
We find, for example, that the expenditures of the 
state of New York have increased from, not quite 
$10,000,000 in 188 1 to nearly $22,000,000 in 1902. 
This is a budget which would seem to indicate 
activity, although, to be sure, far less than the 
budget of New York City. Our Western states 
are developing remarkable educational systems, 
reaching from the common school to the univer- 
sity, and some of our states are developing forest 
property, and a department of forestry. These 
are, perhaps, ample illustrations of the growing 
significance of the state. But we must await future 
developments in order to ascertain the extent of 
the movement. 

The view here presented of public expenditures 
is undoubtedly one which is reassuring. The im- 

1 It must be borne in mind that expenditures alone are not suffi- 
cient evidence to enable us to speak positively on this point. In 
general, however, there is a correspondence between the amount 
of public money expended by a political unit and its social signifi- 



pression must not be gathered from this that there 
is no need for care and watchfulness. As public 
expenditures increase it becomes of more and more 
importance to secure wise and prudent administra- 
tion of all our resources. Wastefulness becomes 
more serious than ever before, and the benefits 
from excellence in administration increase corre- 
spondingly. Without pronouncing any opinion 
upon what is called imperialism, we may also say 
that the enormous increase in expenditures, in 
one way and another connected with war, which 
we have seen during the past few years, cannot 
be viewed without some misgiving. Even the 
most optimistic Englishman cannot regard with 
complacency a national administration approaching 
in its expenditures ;£200,ooo,(X)0 sterling. Even 
if there is no danger of the bankruptcy of any 
great modern nation, the thought must at least 
occur to one that it is a pity that, with so many 
public needs unsatisfied, with such large possibili- 
ties in the way of improvement of education and 
our general environment, such enormous and almost 
incomprehensible aggregates of wealth should be 
annually expended for warlike purposes. 


English and American economists have gener- 
ally treated the subject in a more or less perfunc- 
tory manner, not appreciating its significance. It 
has recently received somewhat fuller treatment 
by authors of treatises on finance. 



The German economists have given more atten- 
tion to this subject, and two of them have treated 
it in a specially instructive way. These are Pro- 
fessor Gustav Cohn and Professor Adolf Wagner, in 
those volumes of their general economic treatises 
called " Finanzwissenschaft." 

Cohn, Gustav, The Science of Finance. Translated by 
T. B. Veblen. Chicago, 1895. Bk. I, The Public 
Economy ; see especially Ch. VI, Order and Sequence 
in the Public Economy. Part I discusses the Classifica- 
tion of Public Wants, and has some helpful observations 
on the relations between public and private expenditures. 

Wagner, Adolf, Finanzwissenschaft. Erster Theil, 3te 
Aufl. Leipzig, 1883. 2tes Buch, Der Finanzbedarf. 

Among American writers, especial mention may 
be made of the following : — 

Adams, Henry C, The Science of Finance. New York, 

Bullock, C. J., The Growth of Federal Expenditures, Politi- 
cal Science Quarterly, March, 1903 (Vol. XVIII), A 
severely critical examination of American federal expen- 

Daniels, W. M., The Elements of Public Finance, including 
the Monetary System of the United States. New York, 

DeW5;y, Davis R., Financial History of the United States. 
New York, 1903. This excellent work deals with the 
expe{\ditures of the United States government as well as 
with other features of our financial history. 

Plehn, Caki* C, Introduction to Public Finance. 2d ed. 
New York, 1900. 




Although much has been said and written 
about the progress which has been made in Ameri- 
can economics in recent years, we are still more 
likely to underestimate than to overestimate the 
advance which has been accomplished, and espe- 
cially are we apt to forget within how short a space 
of time this transformation in American economic 
thought has taken place. The writer of the article 
in The Nation for January i6, 1902, giving an 
account of the annual meeting of the American 
Economic Association held in the preceding month, 
speaks about the activity in economics in this coun- 
try as largely due to men who began their academic 
work some thirty years ago. Now the truth is that 
the men whom he had in mind, men prominent in 
effecting the organization of the American Econ- 
omic Association, were, for the most part, not even 
undergraduates thirty years ago, but were still en- 
gaged in their preparation for college. Most of 
these men are still on the sunny side of fifty, and 
some of them are nearer forty than the former age. 
While the work which was done by men of a still 



older generation should not be disparaged, while 
this earlier work was, indeed, a necessary prepara- 
tion for the more recent work, it is, nevertheless, 
true that the great change in economic thought in 
our country, which has given the United States a 
leading position in economic science, has taken 
place within twenty years, and that it has been 
quite largely brought about by men who believe 
that they still have before them the better part of 
their own work. 

Reflections of this kind are especially appropri- 
ate as an introduction to those portions of the 
Report of the Industrial Commission which deal 
with labor, because the advance which economics 
has made during the preceding twenty years finds 
such marked expression in the methods employed 
and in the conclusions reached by the Industrial 
Commission, and especially by the economists who, 
as experts, were connected with the work of this 
Commission. It is difficult, even for those who 
have followed with some care the treatment of 
labor problems for the past fifteen or twenty years, 
to realize the progress which has been made in 
their discussion, both in respect to positive knowl- 
edge and to scientific methods followed. It is now 
somewhat difficult to do justice to those who, 
twenty years ago, were actively engaged in a sci- 
entific discussion of labor questions in this coun- 
try, and to realize that a large part of the pioneer 
work in this field dates back to a period even 
less remote. The distinction between anarchistic 



and socialistic movements is now understood by 
every economist, and even by the general, intelli- 
gent public ; but it required careful study to dis- 
criminate between these two movements in 1885. 
Every graduate student now understands the dif- 
ference between the principles underlying the 
American Federation of Labor and the Knights 
of Labor, but so careful a student of labor prob- 
lems as Brentano, twenty years ago, denied the 
existence of any labor organization based upon 
the principles underlying the Knights of Labor. 
These are simply illustrations of the condition of 
thought and of knowledge even at so recent a 
period as 1885, when the American Economic 
Association was organized, and serve to show how 
much work has been done in order to give us that 
basis of knowledge with which any economist now 
begins a study of labor. 

Another way of getting at the same thing is to 
contrast the Report of the Industrial Commission, 
created by act of 1898, with the voluminous 
Report of the Senate Committee on Labor and 
Education, in 1885. This earlier report has some 
value, because it gives the opinion of all sorts of 
people on all sorts of questions in any way con- 
nected with labor in 1885. It allowed a good 
many cranks and some thoughtful people an 
opportunity to express their views, and perhaps 
served as a safety-valve, which is probably the 
chief purpose which those had in mind who were 
responsible for the existence of the committee. 



The American economists are so numerous, and 
they have made themselves felt to such an extent 
in every part of the country, that probably we 
shall see no more federal reports on labor like the 
one issued by the Senate Committee of 1885. It is 
a great thing that it is known that there are in this 
country a body of economic experts, and that the 
state of public opinion is such as to demand their 
employment. The entire character of the Report 
of the Industrial Commission, the way the work is 
planned, and the way it is executed, show the con- 
stant guidance of the economist. The economists 
employed belong, for the most part, to those whom 
we would naturally designate as the younger gen- 
eration of American economists, a generation 
younger than those who founded the American 
Economic Association, being, indeed, mostly stu- 
dents of those who were active in the early days 
of this association. When one considers all the 
circumstances surrounding their work, it must be 
said that they did their work remarkably well, and 
that they have strengthened the position and the 
influence of economists in this country. The three 
experts chiefly responsible for that portion of the 
final report dealing with labor are Dr. E. Dana 
Durand, the secretary of the Commission, Profes- 
sor John R. Commons, and Mr. Charles E. Edger- 
ton. Other experts employed by the Commission, 
whose work fell under the head of labor, are 
Messrs. J. R. Dodge, for agricultural labor; Sam- 
uel M. Lindsay, for railway labor; Victor H. Olm- 



sted and William M. Steuart, for prison labor; 
Thomas F. Turner, for Asiatic labor on the Pacific 
coast; F. J. Stimson, for labor legislation, and 
Eugene Willison, for mine labor legislation. Miss 
Gail Laughlin also treated the subject of domestic 
service. It is seen that, out of twenty-seven ex- 
perts employed by the Commission, eleven had to 
do directly and immediately with various phases of 
what we broadly designate as labor problems. 

While the work of the Commission was so 
broadly outlined in the act which created it that 
it could take in every subject pertaining to 
"industry," even when industry is most broadly 
interpreted, it was to be expected that a large part 
of the report should deal with labor. There are 
nineteen volumes in the entire report, and at least 
ten of them deal directly and immediately with the 
subject of labor to a large extent. If there is any 
one subject in the investigations of the Industrial 
Commission, which transcended labor in interest, it 
is the subject of trusts and industrial combinations, 
and it is in part the influence which these have 
upon labor that is responsible for the interest in 

The mass of material furnished in the report is 
so vast that it is discouraging to the busy man, 
who would glean from it its practical and scientific 
teachings, until he discovers how admirably it is 
all arranged, and how excellent is the review of 
the whole subject in the final report. Each vol- 
ume has its preliminary review of its substance, 



which is followed by the digest of evidence, the 
digest giving references to the pages of testimony. 
Each volume also has its own index. The final 
volume has an index covering all the nineteen vol- 
umes, as well as the general review, to which ref- 
erence has been made. This general review, which 
covers only a little over two hundred pages, is 
admirably prepared, covering briefly the most 
essential points concerning labor in the preceding 
eighteen volumes. The one exception to this 
statement relates to agricultural labor, which is 
treated too briefly to harmonize with the general 
plan. The final review is followed by the recom- 
mendations of the Commission. 

The method of using that part of the Report of 
the Industrial Commission which deals with labor 
is then very simple. The student will read, first 
of all, the entire final review, and will find it the 
best text-book as yet written on the labor problem. 
After he has read this broad, general survey, quite 
accurate in its description of the contents of pre- 
ceding volumes, he will consult these volumes for 
a further study of particular topics which specially 
interest him. If the reader is a legislator, espe- 
cially concerned in regard to prison labor, he will, 
if intelligent, desire to read the entire final review, 
in order to see the relation of prison labor to other 
kinds of labor. After he has done this, he will 
carefully examine the small volume entitled " Prison 
Labor" (Vol. Ill), and ascertain the different 
arrangements for directing prison labor in the 


various states of the Union. He will also gain 
some information concerning prison labor in other 
countries, and will have this knowledge, together 
with the recommendations of the Commission, as 
a basis for legislation. Those who are interested 
in various phases of labor legislation will similarly, 
after having read the final review, consult Vols. 
V and XVI, entitled respectively " Labor Legisla- 
tion " and " Foreign Labor Laws." 

Dr. Durand, the secretary of the Commission, 
has elsewhere stated^ that the tone of the final 
review is progressive. This characterizes it cor- 
rectly. It is progressive, but at the same time 
it cannot be called radical. It is based upon a 
profound knowledge of existing conditions, upon 
keen analysis, and very evidently upon long-con- 
tinued and fruitful thought. No one else who has 
written on the subject of labor has given evidence 
of such careful study and accurate knowledge of 
the questions at issue as those responsible for this 
final review. Dr. Durand has stated that the tone 
of the report is more progressive than the commis- 
sioners, as a whole, would be inclined to indorse. 
It is quite probable that the commissioners did not 
give so much attention to the part of their report 
which deals with labor as to other parts, although 
there seems to be evidence of modifying sugges- 
tions received from them in a few portions of this 
final review. At the same time, this review is in 

1 See his article, " United States Industrial Commission," Quar* 
terly Journal of Economics^ August, 1902. 

z 337 


general harmony with the portions of preceding 
volumes dealing with labor, and the recommen- 
dations of the commissioners themselves could 
scarcely be characterized otherwise than as pro- 

In the brief space of a single chapter it is diffi- 
cult to give an adequate idea of the character of 
the work which is under examination. Probably, 
under the circumstances, the best method is to take 
up very briefly the more prominent topics discussed 
in the final review, devoting a few words to each. 

The final review is divided into four main parts, 
namely : I, General Conditions and Problems ; II, 
Relations of Employers and Employees; III, Pro- 
tection of Employees in their Labors ; IV, Labor 
on Public Works. 

The first main part, dealing with general con- 
ditions and problems, is especially valuable on 
account of the careful discriminations which are 
made in this survey. A considerable space is 
devoted to negative work, which is necessary to 
clear the ground for profitable discussion. Popular 
errors must be examined, and the necessary limita- 
tions of the investigation must be made clear. It 
is pointed out, under " Profits and Wages," that we 
must sharply distinguish between two different 
aspects of the problem which they present. One 
aspect deals with the share of industry which goes 
to the factors of production, namely, labor, capital, 
land, monopolies, etc. The second aspect deals 
with the '* income and social welfare of the manual 


working classes.** Every economist knows that 
here we have two different orders of inquiries, but 
this fact, important as it is, is often overlooked. 
Under the head, " Uncertainty of Statistics," we 
have a correction of errors which are too common ; 
as, for example, that the rate of interest on invest- 
ments is an indication of the proportion of the 
product of labor and capital which either one re- 
ceives. Strange as it may seem, it has been sup- 
posed that lo per cent on an investment indicates 
that labor receives 90 per cent of the product. On 
the other hand, there are those who have drawn 
the conclusion that because of the value of manu- 
factured products the aggregate wages amount to 
a little less than 25 per cent, that is all that labor 
receives of the joint product. Manifestly, it is 
necessary to examine into the cost of raw mate- 
rial used in manufactures, and the portion of that 
which accrues to labor. 

A useful discrimination is made with respect to 
the earnings of capital, and here we come to some- 
thing which even economists have not always 
borne in mind. We have to distinguish between 
the interest on disposable capital and the profits 
on established enterprises. The profits on estab- 
lished enterprises include, it is said, such things as 
" good will, trade-marks, patent rights, and monop- 
olies of various kinds.** The final review contin- 
ues : " Monopoly privileges, for example, wherever 
they exist, become more and more valuable as 
population increases, and the net returns are 



thereby augmented; but, at the same time, the 
rate of interest on disposable capital, not protected 
by these privileges, has continually declined." 
After an examination of the actual decline in the 
rate of interest since 1865, it is asserted that there 
is an insurmountable difficulty in the endeavor to 
discover the rate of profit received in industry, 
with one exception, namely, national banks; for 
the reason, it is said, that we cannot ascertain the 
amount of capital invested, since census returns 
and statistical inquiries include, under capital, not 
only cash investments, but such factors as those 
which have just been mentioned, namely, good 
will, trade-marks, franchises, monopoly values, 

The treatment of wages which follows is illumi- 
nating in its presentation of facts, and in its fine 
discriminations. Here, as elsewhere, what we need 
is careful analysis ; but it requires a great deal of 
time and effort to educate the general public up to 
the point where analysis is appreciated. The or- 
dinary man wants what we may term ** rough and 
ready " conclusions. He wants to know that wages 
have risen so many per cent, or that they have 
fallen, and between the two broad statements he 
finds no middle ground. One of the gains which 
we may hope will result from the publication of 

^ The census returns of 1900, as a matter of fact, do take special 
notice of these items, and attempt to separate them out in the capi- 
talization of manufacturing concerns. A further discussion of this 
point is desirable, but space is too limited to allow the present 
writer to say more about it in this review. 


the Report of the Industrial Commission is that it 
will gradually impress upon the more intelligent 
portion of the American community the importance 
of those distinctions which the economist so well 
understands, but which are too apt to be dismissed 
by the daily press as merely academic exercises. 
It is pointed out that the movement of wages is 
slower than the movement of prices, as a conse- 
quence of which, in time of general prosperity, 
the wages do not rise so rapidly as the commodities 
which the wage-earner must purchase; whereas, 
it is affirmed, that in time of depression the wage- 
earner suffers from lack of employment, and does 
not enjoy the fruit of low prices. There does not 
seem to be sufficient support in any part of the 
Report of the Industrial Commission for this broad 
statement, and the facts in the case have not re- 
ceived anywhere, so far as the present writer is 
aware, scientific treatment. Elsewhere in the re- 
port it is shown that unemployment is not so great 
as many have supposed, and probably a good deal 
of support could be adduced for the thesis that 
ordinarily the wage-earner is most prosperous 
under a regime of low prices. Wages, however, 
have risen since 1869, according to the statistics 
presented, which are based upon a careful exami- 
nation of a variety of sources. Wholesale prices, 
however, have fallen in marked degree. The con- 
clusions reached in this particular are of especial 
interest on account of the fact that we may take it 
for granted that those who prepared the final re-* 



port were not seeking to make out a case for exist 
itig conditions. 

Attention is called, however, to the fact that we 
must consider not merely or chiefly daily wages, 
but rather yearly wages ; to the further fact that 
the average wages must be higher, on account of 
the increasing relative proportion of wage-earners 
living in cities, if the wage-earner is to be equally 
well off in his economic well-being ; and further- 
more, mention is made of the increasing intensity 
of exertion, on account of the introduction of ma- 
chinery and the division of labor, which must be 
considered when passing judgment upon relative 

Finally, a distinction is made between the earn- 
ings of organized men and those unorganized. And 
it is a difference of importance. It is shown by vari- 
ous illustrations that the organized workingmen 
have been able to secure a greater relative increase 
in wages than the unorganized. These conclusions 
are summed up in the following words, " Taking 
into account these observations, it must be con- 
cluded that the daily rate of wages is not a safe 
measure of the changing conditions of labor, and 
that, in a discussion of the progress of the working 
population, account must be taken of the amount 
of annual employment, depending on general con- 
ditions of prosperity and depression, the life earn- 
ings of the worker, depending upon the increasing 
intensity of exertion and overwork, and the in- 
creased necessary expenses of city life." 



After a fairly satisfactory treatment of the " pay- 
ment of wages," with respect to time and piece 
payment, cash payments vs. payments in kind, 
etc., the sweating system is examined. The most 
satisfactory results of legislative efforts aimed 
against sweat shops are found in Massachusetts, 
and that, not because the legislation itself is most 
advanced, but because such legislation as there is 
is rendered effective by excellence of administra- 
tion, on account of the high grade of inspectors 
employed, and the civil service laws which give 
continuity in office and protection to the inspec- 
tors. This is only one of several places where the 
importance of administration as distinguished from 
legislation is emphasized. In the treatment of child 
labor it is shown that, in addition to good laws, there 
must be a sufficient body of inspectors to enforce 
the laws effectively. The importance of com- 
pulsory school attendance for children is some- 
thing recognized by the experts employed by the 
Commission, and almost, if not quite, unanimously, 
by the members of the Commission themselves. 
But the District of Columbia offers an illustration 
of the fact that a compulsory attendance law has 
little significance unless it is the duty of some spe- 
cific person to enforce it. It is well that this 
importance of administration receives emphasis, 
inasmuch as in the administration of law we Ameri- 
cans have been weak, whereas we have been too 
inclined to think that mere legislation in itself 
could accomplish beneficent results. 



Unemployment receives especially full treat- 
ment, as might be expected from the personnel 
of the experts who prepared the final report. 
Again we find that careful analysis which has 
been so frequently mentioned. The causes of un- 
employment are divided into three main classes, 
namely, personal, climatic, and industrial. Re- 
ports of charity organization societies serve as a 
basis of the treatment of personal causes of un- 
employment, and this section of the work sug- 
gests the admirable treatment upon the same sub- 
ject found in the late Professor Amos G. Warner's 
book, "American Charities." 

The climatic causes of unemployment are due 
either to weather or to changes in consumption on 
account of the succession of the seasons. Some 
kinds of seasonal unemployment could, perhaps, 
without impropriety, be placed under the heading 
of vacation. The teacher cannot be regarded as 
unemployed during vacation, and there are sea- 
sonal trades which have periods of idleness, which 
could possibly be treated as rest periods. At the 
same time, it is interesting to note that with the 
progress of industries greater regularity in em- 
ployment is secured. One kind of employment 
in the summer is followed by another sort in the 
winter, and certain trades have to a greater extent 
than heretofore conquered nature. Building is 
carried on more extensively in winter than for- 
merly. However, after all allowances are made, 
it is still true that seasonal irregularities are an 



evil which is keenly felt by large numbers of wage- 

Under industrial causes of unemployment we find 
a treatment of strikes, machinery, and employment 
agencies. The loss of employment through strikes 
is a serious one, but not so great as we are frequently 
led to infer by statistical statements. In many 
cases, the strike means simply a transfer of a 
period of unemployment from one time to another, 
and there must be cases where a period of unem- 
ployment would, to some extent, coincide with a 
strike period. The ordinary opinion of experts 
concerning machinery as a cause of unemployment 
is in the main confirmed. An illustration is found 
in the increasing number of railway employees in 
the United States, notwithstanding all the improve- 
ments and economies of labor which have been 
introduced. The imperfect and insufficient char- 
acter, however, of the statistics of unemploy- 
ment is mentioned, and the conclusion suggests 
itself that there is an opportunity for various labor 
bureaus to render service in increasing our knowl- 
edge of the facts of the case. More has been 
done by the New York Bureau of Labor Statistics 
than by any other, but the researches even of this 
bureau embrace only organized labor in the state 
of New York since 1897. The work of the free 
employment bureaus is described, but they are 
evidently considered simply a palliative and no real 
remedy for the evils of unemployment. 

The longest section of Part I, dealing with 


General Conditions and Problems, is devoted to 
hours of labor, and this is the final section. The 
benefits of shorter hours are described and empha- 
sized strongly. The movement to secure shorter 
hours is favored, and it is insisted that, inasmuch 
as the tendency of industry requires increasing in- 
tensity of exertion, a corresponding shortening of 
the working day is needed to preserve the health 
and vigor of the wage-earning population. Re- 
strictions of output, on the other hand, are dis- 
countenanced as a disadvantage to American 
industry. Testimony is adduced to show that, up 
to the present time, as a rule, the shortening of 
the working day has not decreased production, 
although it is admitted that it is a rule with excep- 
tions. It is also admitted that one part of the 
American Union may be placed at a disadvantage 
as compared with another section, on account of 
the more rapid rate in the decrease of the length 
of the working day in the former. In the matter 
of foreign competition it is claimed that this dis- 
advantage of American workmen does not hold, 
because American labor receives the advantage of 
the protective tariff. The efforts of labor organiza- 
tions to secure shorter hours are described, and 
then there follows a treatment of legislation cover- 
ing the hours of labor. Emphasis is naturally 
laid upon the decision of the Supreme Court of 
the United States in the well-known Utah mining 
case, where an eight-hour day for the miners was 
sustained on the ground that in protecting a large 



class of employees the state is protecting the com- 
munity as a whole. The decision of the Supreme 
Court of Massachusetts, sustaining a law limiting 
the hours of women in certain employments to 
sixty hours per week, is also cited, as well as the 
decision of the Supreme Court of Illinois, declar- 
ing an eight-hour law, applying to adult women in 
factories, unconstitutional. It is interesting to 
notice the opinion expressed in the final report that 
legislation upon the subject of hours of labor can- 
not be general, but " must be based upon accurate 
investigation of the conditions in the several 
industries." It is urged that the United States 
Department of Labor should be furnished with 
adequate funds to conduct a full investigation of 
the injurious occupations, employing medical and 
technical experts for this purpose. This is im- 
portant in view of the tendency of the courts to 
rule against what is called class legislation; for 
the question can very well be raised, if effective 
legislation must not necessarily be based upon a 
recognition of classes in the community, with needs 
which vary according to class. A special point is 
made of the desirability of uniformity of legisla- 
tion among the states of the Union, concerning 
hours of labor. It is in the main, however, recom- 
mended that legislation restricting the hours of 
labor should be applicable only to those under 
twenty-one. The legislature of New Jersey, limit- 
ing the hours of labor in factories to fifty-five per 
week, is recommended as a standard which should 



be adopted by every state with factory production. 
It is recognized that federal legislation must be re- 
stricted mainly to those engaged in interstate com- 
merce, and to those directly employed by the 
federal government. 

Having treated with such fulness that portion 
of the final report which gives the general survey, 
the remaining parts can be passed over much more 
briefly. The first topic which is discussed, under 
" Relations of Employers and Employees," is labor 
organizations. Thel^ growth and membership are 
briefly described, and it is shown that they are a 
necessary feature of industrial evolution. As a dis- 
tinct wage-earning class arises, trade-unions come 
into existence, and as industry expands labor organ- 
izations expand likewise and become national and 
international. The two greatest efforts in this 
country to give unity to the organization of labor 
are those which have proceeded from the Knights 
of Labor, and the American Federation of Labor. 
The Knights of Labor endeavored to secure a unity 
like that of the " republic indivisible '* which was 
the ideal of the leaders of the French Revolution, 
whereas the American Federation of Labor has 
had as its ideal a large degree of autonomy for the 
separate organizations, along with unity in impor- 
tant matters of general concern. The founders of 
the American Federation of Labor undoubtedly 
had floating before their minds, as a model of 
organization, the political union of the American 
states. The advantages of labor organisations find 


sympathetic treatment. If the attitude of labor 
organizations towards non-union labor is not justi- 
fied, it is at least explained, and it is needless to 
dwell upon the importance of understanding the 
real basis of the antagonism of union labor towards 
non-union labor. There are comparatively few 
people outside the wage-earning ranks who under- 
stand how much can be said in favor of the position 
which organized labor assumes in this particular; 
and this can be admitted, even if we are unable to 
justify the conduct of labor organizations with 
respect to those outside their ranks. This conduct 
is undoubtedly frequently reprehensible and some- 
times even criminal. But those will not succeed 
in finding a remedy who do not understand the real 
nature of the question. 

After a brief discussion of the political activities 
of labor organizations, we have an extended treat- 
ment of "collective bargaining, conciliation and 
arbitration." Collective bargaining is defined as a 
" process by which the general labor contract itself 
is agreed upon by negotiation directly between 
employers, or employers* associations and organized 
workingmen" (p. 834). It is shown that collect- 
ive bargaining is the necessary outcome of the 
progress of industry with labor organizations, and 
that conciliation and arbitration imply organization 
alike of capital and of labor. 

Careful discrimination is made between two 
main classes of industrial disputes, viz., "first, 
those which concern the interpretation of the ex- 


isting labor contract or terms of employment, and 
which usually are of a relatively minor character; 
second, those which have to do with the general 
terms of the future labor contract, and which are 
usually more important." It is shown that con- 
ciliation has been far more successful than arbitra- 
tion. One of the most important features of this 
part of the final report is the emphasis laid upon 
the great advantage of conferences composed of 
"relatively large numbers of representatives of 
employers and employees." It is said that these 
conferences need not be held at regular intervals, 
and that when they are held they should be con- 
ducted with informality. If disputes cannot be 
settled by the parties themselves, it is held that 
they should then be referred to a board, composed 
of representatives of employers and employees, 
who, while not directly interested themselves, are 
nevertheless familiar with trade conditions, and 
perhaps even personally acquainted with the par- 
ties to the dispute. These boards are called trade 
boards of conciliation and arbitration, and it is 
maintained that such boards can frequently remove 
misunderstandings which are so often a cause of 
industrial strife. 

It is shown that the state boards of arbitration 
in the United States have accomplished important 
results only in a few states. The states which are 
mentioned are Massachusetts, New York, Ohio, 
Indiana, Illinois, and Wisconsin. Perhaps the list 
should be confined to the first two. The position 


is taken that the work of state boards must " be 
confined chiefly to disputes in trades where no 
systematic methods of collective bargaining and of 
trade conciliation and arbitration exist" (p. 852). 
Such boards of arbitration frequently lack, it is 
said, familiarity with local and trade conditions, 
and are distrusted both by employers and em- 
ployees. It is evident from the survey of the 
Industrial Commission, as well as from the reports 
of state boards, that they can accomplish no large 
results unless clothed with sufficient powers to 
make themselves respected by employers and em- 
ployees alike. In many states the state boards are 
so feeble, both in their personnel and in their 
powers, that they are simply contemptible. 

Compulsory conciliation and arbitration, without 
legal enforceability of decision, meets with sympa- 
thetic treatment, and is favored, on the whole, on 
account of the advantages to employers and em- 
ployees, and also especially on account of the 
interest of the general public in industrial peace. 
Compulsory arbitration is briefly described, and its 
success, up to the present time, m New Zealand 
noted, although it is pointed out that extreme cau- 
tion must be displayed in drawing lessons from a 
small agricultural country like New Zealand for 
a great industrial country like the United States. 
Mention is made of the fact that there are persons 
who believe that " compulsory arbitration is desir- 
able as a last resort in the case of those few great 
disputes which affect with special severity the gen- 



eral public interests." Probably it will be felt by 
economists that this section, dealing with compul- 
sory arbitration, is one of the least satisfactory in 
the entire final report. The strength of the argu- 
ment in favor of compulsory arbitration is found 
in the gradual extension of legal means for the 
settlement of disputes in general, and in the supe- 
riority of the public interest over the interest of 
particular persons. A sharp discrimination must 
be made between various industries, and if com- 
pulsory arbitration is to be introduced in a great 
country like the United States, it must be begun 
tentatively in those industries, the continuous oper- 
ation of which is of paramount public concern. It 
must, in other words, begin with what are called 
quasi-public industries. A correct line of argu- 
ment is suggested, but not satisfactorily elaborated. 
One question must, however, be raised, and that 
is this : Does not compulsory arbitration in the final 
analysis mean that, when everything else fails, 
government must step in and operate the industry 
for which compulsory arbitration has been estab- 
lished ? President Hadley, in his work on " Econ- 
omics," has some instructive remarks upon the 
difficulties of compulsory arbitration.^ He points 
out that compulsory arbitration, even in quasi- 
public pursuits, may stop the investment of fresh 
capital, and that this investment is important for 
the general public. We may establish arbitration 
for coal mines and for railways, but we cannot, 

1 Chap. XI, § 399. 



consistently with free industry, find a way to com- 
pel people to invest their money in the operation 
of railways and coal mines, if they feel that com- 
pulsory arbitration will render these pursuits rela- 
tively unprofitable. There can be no doubt that 
this outcome of compulsory arbitration is a possi- 
bility. It would seem necessary, then, in all dis- 
cussion of compulsory arbitration, to face squarely 
the fact of a possible temporary, or even perma- 
nent, government operation of those industries for 
which such arbitration is established. 

Strikes and lockouts are treated with a consid- 
erable degree of thoroughness. The past liter- 
ature is reviewed instructively, and several points 
are brought out which, if not new, are at least not 
very generally understood. The causes of strikes 
are analyzed, and it is shown that the four chief 
causes are demands for increase of wages or pro- 
tests against a decrease; demands for a shorter 
working day ; and finally, demands which relate to 
methods of calculating wages or paying them. 
These four classes of demands cover four-fifths of 
the entire number of demands by strikers. Accord- 
ing to the Report of the Department of Labor 
covering the years from 1 881-1900, in about two- 
thirds of the establishments in which strikes oc- 
curred, the workmen were either wholly or partially 
successful, although only about one-half of all the 
persons engaged in strikes were wholly or partly 
successful in obtaining their demands. As is well 
known, the strikes for higher wages are more 
2A 353 


largely successful than strikes against a reduction 
of wages, due to the fact that the former are made 
in times of increasing prosperity. Organized work- 
ingmen appear to be more generally successful than 
unorganized, in their strikes. A comparison of re- 
sults of strikes between various countries shows that 
there are more unsuccessful strikes in the United 
States than in the other leading countries of the 
world, while Great Britain has the largest per- 
centage of strikes reported as entirely successful 
It is pointed out that it is difficult to estimate the 
final results of strikes, and it is shown why the 
leaders of organized labor insist that they are, on 
the whole, beneficial. The claim is made that the 
fear of strikes has a wholesome influence upon 
the rate of wages and the conditions of labor, and 
furthermore that benefits received from strikes con- 
tinue for indefinite, but very generally long, periods 
of time. While we must deplore strikes and lock- 
outs, we should not overlook the facts to which 
attention is here called. A strike may last for a 
few weeks, and the increase in wages or shorter 
hours thereby secured may continue for something 
like twenty years, as has happened in the case of a 
street-car strike which took place in Baltimore in 
the '8o's. The very obvious conclusion to be drawn 
from this part of the report is that we cannot 
hope to do away with strikes and lockouts unless 
we substitute other effective methods in their place 
for the adjustment of industrial disputes. Atten- 
tion is called to the exaggeration by the press of 


the influence of the leaders of the workingmen, 
and it is shown that the actions of trade-unions 
are governed by the vote of their members. 
Intimidation and violence and picketing are briefly 
discussed, and then follows a treatment of the boy- 
cott. Boycotting is not wholly discountenanced, 
but a sharp distinction is made between what is 
called the simple and the compound boycott. The 
first relates to " a voluntary withholding of patron- 
age by workingmen directly concerned in a dis- 
pute, or by other persons because of sympathy for 
them," and compound boycotting is called "the 
coercive boycott." This refers to cases in which 
"workingmen threaten refusal of patronage to 
those who patronize the employer, thus endeavor- 
ing to force them not to do a thing which they 
have a legal right to do." The compound boycott 
is pronounced illegitimate. 

The subject of injunctions is carefully and, on 
the whole, conservatively treated. It is held that 
the right of injunction is to be defended, but that 
its use is to be restricted. The following quota- 
tion expresses the conclusion reached: "It is 
undoubtedly desirable that this extraordinary pro- 
cess of injunction should be employed with greater 
conservatism than has been the case during the 
past decade. However severely the acts of strik- 
ers against which injunctions are usually directed, 
may be condemned, this is, in many cases, scarcely 
a proper method of checking them. Some injunc- 
tion orders have gone too far in the scope of acts 


prohibited, and have been too indiscriminately 
applied to great bodies of people. It seems desir- 
able that statutes should be enacted, defining with 
greater precision the acts of workingmen which 
are permissible, or which are civilly or criminally 
unlawful, in order that a clearer indication of the 
limits of the injunctive process may be given. It 
would seem more in accordance with legal pro- 
cedure to limit the application of injunction orders 
than to provide for jury trial of violation thereof." 
The third main section, dealing with the " Pro- 
tection of Employees in their Labor," is one of 
the most interesting. It reviews the whole body 
of so-called factory legislation, enabling us to com- 
pare the various leading industrial countries of the 
world with one another, and particularly to institute 
comparisons between the various states of the 
Union. The four leading states, so far as we may 
judge from Mr. William F. Willoughby's table 
upon the duties of factory inspectors, are Massa- 
chusetts, New York, New Jersey, and Pennsylvania. 
Under the duties of factory inspectors to enforce 
laws there are thirty-two points. New Jersey has 
inspection covering twenty-four points ; Massachu- 
setts and New York covering twenty-two points, 
and Pennsylvania twenty-one points. The position 
which New Jersey takes will doubtless surprise 
many readers. On the whole, however, Massa- 
chusetts and New York seem to be the leaders, 
and they are recommended by the Commission as 
models. Probably of all the states, Massachusetts 


is still the banner state of the Union, when we 
take into account not only the number of points 
covered, but the methods of carrying out the law 
and the positive provision made in education, and 
otherwise in behalf of the wage-earning population. 

One of the most instructively treated topics in 
this section of the report is that which deals with 
the employment of women. Here popular and 
very widely held errors are corrected. It is shown 
that the increased employment of women is 
chiefly due to what we may term the socialization 
of industry. Work which was formerly performed 
in the house has been taken outside the home into 
factories, and the employment of women has 
largely been transferred. There is no reason to 
suppose that a larger number of adult women are 
engaged in toil now than formerly, and still less 
reason is there to suppose that very generally the 
women are replacing men. In addition to the fact 
that industry has been socialized, is the further 
fact that new employments have arisen, such as 
typewriting, which have given new work and in- 
creased the number of workingwomen, without 
taking work which was formerly performed by 

One of the most important topics under the 
protection of employees relates to employers' 
liability. Attention is called to the unsatisfactory 
condition of the law in the United States, and it is 
shown that not only few workingmen of the 
United States receive compensation for accidents, 


but that the number tends to decrease, unless the 
common law is supplemented by statutes. One 
great obstacle to the recovery of damages is the 
doctrine of " fellow-servant," by which the em- 
ployer escapes liability for the negligence of his 
agent in case the injured workingman is a fellow- 
employee of the agent. There is also the further 
doctrine of contributory negligence, which relieves 
the employer, although the larger part of the 
blame may be his. There is also the further doc- 
trine that the employee assumes risk if he was 
aware of the danger and did not call attention to 
it, although to have called attention to the danger 
might have resulted in his discharge. The most 
instructive part of this portion of the final 
report is that which establishes the fact that to 
an increasing extent we have to do, in industrial 
accidents, not with blame attaching either to em- 
ployee or employer, but with an industrial risk 
which is part and parcel of modern industrial 
methods. The ideal then is to make the industry 
carry the industrial risk, rather than to attempt to 
place the responsibility upon individuals, whether 
employees or employers. This is the general prin- 
ciple which has received acceptance in Germany 
in the insurance scheme which provides for em- 
ployees who suffer from industrial accidents. The 
difficulty of reaching this ideal in our country is 
described, and the English employers* liability act 
is recommended as the present ideal. The English 
act places the responsibility in a general way upon 


the employer and prevents " contracting-out " of 
the liability. 

The fourth main section, dealing with Labor on 
Public Works, is a short one and can be dismissed 
with a few words. The advantages and disadvan- 
tages of public works are discussed. It is shown 
that in the case of federal public works, production 
is usually far more costly than in private works, 
but it is denied that, generally speaking, this is 
due to defects inherent in public undertakings. 
So far as this increased costliness is due to better 
labor conditions, it appears to be favored. In a 
general way it is recommended that government 
should be a model employer, while maintaining 
the highest possible degree of efficiency. 

Turning now to the formal recommendations of 
the Commission, the reader must again be reminded 
that these are distinct from the final review, or any 
other reviews. The recommendations of the Com- 
mission are the formal official action, whereas the 
other parts of the report are largely the work of 
the experts employed by the Commission. The 
Commission, first of all, recommend a regulation 
of the hours of labor in industrial occupations. 
Uniformity among the states is emphasized as es- 
pecially important. The opinion is expressed, how- 
ever, that limitation of the hours of labor should be 
restricted to persons under twenty-one, except in 
special industries where employment " for too many 
hours becomes positively a menace to the health, 
safety, and well-being of the community.'* It is 



recommended that no children should be employed 
under the age of fourteen, and that accompanying 
labor legislation there should be educational restric- 
tions providing that no child may be employed in 
" factories, shops, or stores in large cities who can- 
not read and write." In all public work it is rec- 
ommended that the length of the working day 
should be fixed at eight hours. It is recognized 
that this discriminates between public and private 
employment, but the hope is expressed that pri- 
vate employment may be brought up to the level 
of public employment in this particular. It is fur- 
ther recommended that the federal government 
should regulate the hours of labor of employees 
engaged in interstate commerce. 

It is recommended that the states should pro- 
vide for cash payments and should legislate against 
company stores. 

The careless use of injunctions is pronounced 
reprehensible, and "blanket injunctions against ail 
the world, or against numerous unnamed defend- 
ants, as well as the practice of indirectly enforcing 
the contract for personal service by enjoining em- 
ployees from quitting work, should be discouraged 
not only by popular sentiment, but by intelligent 
judicial opinion. There should be no unnecessary 
departure from the time-honored principle that 
the contract of personal service cannot be specifi- 
cally enforced, because to do so entails a condition 
of practical slavery " (p. 949). 

Turning to intimidation, the New York statute 


relative to railway labor is recommended for gen- 
eral adoption. The New York statute protecting 
the political rights of laborers is also recommended 
as a model. 

The practice of giving a preferred lien to em- 
ployees for debts due for wages and salaries is 
approved, and its extension recommended. 

The subject of convict labor, which is treated in 
a separate volume, is referred to in the recommen- 
dations of the Commission. In this separate report 
the New York plan, in accordance with which con- 
victs manufacture goods for the use of state insti- 
tutions, seems to meet with approval so far as it is 
practicable. It is recommended that in all cases 
the punishment and reformation of the prisoner 
be placed above revenue considerations, and that 
a system be devised which should give all prison- 
ers employment in productive labor, with the least 
possible competition with free labor. In the rec- 
ommendations of the Commission, it is said to be 
clear that "Congress should legislate to prevent 
the importation and sale of convict-made goods 
from one state into another, without the consent 
of the state into which the goods are imported or 
where they are sold.'* 

The factory acts of Massachusetts and New York 
are recommended, as well as the sweat-shop laws 
of New York, Massachusetts, Pennsylvania, and 

The enactment of a code of laws for railway 
labor is considered to be within the province of 



Congress, as it falls under the ** interstate powers." 
It is especially recommended that in such a code 
there should be a careful definition and regulation 
of employers' liabiUty and of the hours of labor. 

The protection of trade-union labels is recom- 
mended. It is further recommended that "con- 
spiracy should be defined and limited." Laws 
against black-listing and the use of private police 
detectives are approved. 

The Commission finds that the laws of the states 
with respect to conciliation and arbitration have been 
found effective for purposes of conciliation, but that 
so far as arbitration, strictly defined, is concerned, 
they have not accomplished any large results. 
Further efforts in the direction of conciliation and 
arbitration are recommended, and the Commission 
believe "that whoever inaugurates a lockout or 
strike without first petitioning for arbitration, or 
assenting to it when offered, should be subjected 
to an appropriate penalty." It is recommended 
also that arbitration should not be restricted to a 
public board, but that the parties to the dispute 
should be permitted to choose arbitrators if they 

Finally it is recommended that all the states not 
now having them should establish labor bureaus, 
and that their duties should be extended, and that 
they should cooperate with the legislative bodies 
of the states and with Congress in legislation by 
means of their recommendations. 

These recommendations are signed by eleven 


members of the Commission. Another member 
of the Commission cordially indorses them in a 
supplementary note. Four commissioners dissent 
from the report. The theory of those who dissent 
seems to be based upon the eighteenth-century 
philosophy of individual liberty, and to have as its 
direct, practical purpose the interests, real or sup- 
posed, of Southern manufacturers. Two of the 
dissentients are large cotton mill owners, one of 
them one of the most prominent operators in 
Charlotte, N.C., and the other the president of 
the milling corporations of Pelzer, S.C.^ The for- 
mer, however, recommends ample school facilities, 
with compulsory education, cooperative savings 
institutions under state laws, and the establish- 
ment by the United States government of postal 
savings-banks, and finally "liberal provision for 
the incorporation of labor organizations." 

This review of the portions of the Industrial 
Commission Report dealing with labor, although 
it has gone beyond the length originally contem- 
plated, is inadequate. This is necessarily so, on 
account of the largeness of the subject, and the 

1 This gentleman, Mr. Ellison A. Smyth, it should be said, has es- 
tablished better conditions for his employees than are usually found 
in the South; has provided an excellent school for the children, to 
which he requires his employees to send them, while he advocates 
compulsory education, and has used his influence in favor of a law 
recently enacted in South Carolina, taking the first steps in the regu- 
lation of child labor, and in its prohibition in mills in the case of 
children under ten, with a gradual increase of the age under which 
children may not work up to twelve years. 



proportion of space devoted to it. It is, however, 
hpped that what has been said will give an idea, 
which is correct so far as it goes, of the excellent 
work which has been done by the Commission, and 
of the character of their report upon the subject 
of labor. 

In a general way it may be said that the report 
deals with labor in its static rather than in its dy- 
namic aspects. The idea of evolution in labor 
conditions is suggested here and there, but not 
consistently develpped, and perhaps to do so would 
not have been in harmony with the character of 
the work assigned to the Commission. The report 
leaves here, as elsewhere, an unlimited quantity of 
work for scholars, but the report must be a point 
of departure for further scientific work concerning 
labor in the United States. It is a mine of infor- 
mation, and it is also a practical guide for the 
legislator. It is the most notable achievement of 
the kind in the history of the United States, and 
it will compare very favorably with any similar in- 
vestigation undertaken in any country. Credit 
must be given to the good sense and judgment of 
the Commission, and especially to the experts 
whom they employed. 

Perhaps in the whole report nothing is more 
noteworthy than the extent to which, along with 
many differences, agreement could be reached in 
important particulars. Here, as elsewhere, it is 
seen that ignorance is a cause of dissension, and 
knowledge a cause of harmony. 



The Yale Review for November, 1902, is de- 
voted largely to a review of this Report. The 
present chapter is a reprint of that part of the 
Review which deals with labor. In addition to 
editorial comment, there are also articles on the 
various parts of the Report, dealing with Trans- 
portation, Agriculture, Taxation, and Trusts, written 
by Professors H. C. Adams, L. H. Bailey, Carl C. 
Plehn, and Maurice H. Robinson. 



The following quotation from the Final Report of the In- 
dustrial Commission states concisely the policy of the trade- 
unionists with respect to non-union men: — 

" The maintenance of the union organization, through which 
the wage is upheld, costs time and trouble and money. More 
important than anything else, it involves for those who are 
active in it the peril of the displeasure of their employers and 
the loss of their livelihood. If the non-union man secures a 
rate of wages above what he could get if the union did not exist, 
the members of the union feel that he has made a gain directly 
at their expense. They have sown and he has reaped. It seems 
to them to be required by fairness that he share with them the 
burden of maintaining the conditions of which he reaps the 
benefit. If he is not willing to share the burden, it seems to 
them only just that he should be excluded from the gain. 

" If, on the other hand, non-union men, as efficient as the 
members of the union, compete for employment by cutting 
under the union rates, there is a great weakening of the col- 



lective bargaining. The employer will prefer the non-union 
to the union man because he is cheaper. Those who are in 
the union will be tempted to leave it, because their chances 
of employment will be greater outside than in. The final re- 
sult of the process, if permitted to work itself out freely, will 
be, it is declared, the destruction of the organization itself. 

"The intelligent and conscientious unionist accepts this argu- 
ment the more readily because he looks beyond his personal 
interest to the interest of his trade and of the whole working 
class. The elevation, first of his immediate fellow-workmen, 
and afterwards of all wage-earners, is the ideal which be sets 
before him. He believes that no other change, no increase 
of scientific knowledge, no ennoblement of art, no multiplica- 
tion of material wealth, can be compared to this in its im- 
portance to the social body. He may or may not believe that 
it is necessary to look for radical improvement to changes of 
the laws. In any case the thing that seems to his mind to 
give the best promise of immediate results is the organization 
of labor. It follows that it is every man's duty, in his view, 
and in particular the duty of every wage-earner, to strengthen 
the labor organizations. The workingman who stands aloof 
is often felt to be a recreant to his social obligations, and a 
traitor to his fellow-workmen and to his class. 

" There is beyond question much force in the argument of 
the union men in defence of their attempt to exclude others 
from employment. The union can exercise little control over 
the conditions of labor if there is a large body of unorganized 
men in the trade who do not join in collective bargaining, but 
who are willing to accept inferior conditions. If workingmen, 
perhaps through misunderstanding of the advantages which 
organization may bring them, are unwilling to join in the col- 
lective cause, there is much excuse for the endeavor to make 
their conditions such as to alter that determination. So long 
as the actions of labor organizations in this direction are peace- 
ful, without intimidation or physical violence, it is not easy 
to see why they should be placed under the ban of the law. 

"The attempt to compel employers to hire only union men 



may evidently be poor policy for labor organizations which 
have not yet strength enough to enforce the demand. The 
animosity of employers is likely to be aroused by what seems 
to them dictation. It must not be forgotten, however, that, 
in a very large number of establishments, in many trades, 
employers — apparently with little objection — enter into agree- 
ments for the exclusive employment of union men. Yet it is 
obviously desirable that the unions should rely, so far as pos- 
sible, upon persuading their fellow-workmen of the advantages 
of organization, and upon persuading employers of the supe- 
rior efficiency and regularity of union labor, rather than upon 
more coercive methods. 

" The attempt of labor organizations to make their member- 
ship as comprehensive as possible is materially different in 
character from the attempt, less frequently made, to exclude 
persons altogether from the trade. If the union is willing to 
receive any competent person into its ranks, no man can com- 
plain of being absolutely deprived of work because union men 
refuse to work with him so long as he fails to join the organi- 
zation. When, however, a union has established a substantial 
control of its special kind of labor, the temptation arises to 
restrict the number of members. This is occasionally done 
by an absolute refusal to receive new candidates. Such action 
is, however, rare; the forms in which this tendency more 
commonly appears are restriction on apprenticeship and high 
initiation fees.'' ^ 


The following table, showing the duties of factory inspectors 
in the United States, indicates the nature of the protective fec- 
tory legislation in the United States, and the progress which 
has thus far been made. It is true that the entire protective 
labor legislation cannot be placed under the head of "duties 
of fectory inspectors," but, nevertheless, this table gives the 
more important points : — 

1 Final Report of the Industrial Commission, Vol. XIX, pp. 
























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An essential part of protective labor legislation is found 
in the child labor and compulsory education laws, which are 
given in the table below : — 

Summary of Child Labor and Compulsory Education Laws 
IN Force, October, 1901I 


Age under 


labor in 

factories is 


Age under 
labor in 
mines is 


Age for 


of compulsoiy 

Maine . . . 

. . 12 


16 weeks 

New Hampshi 

re. . 12 


12 weeks 

Vermont . 

. . 10 


28 weeks 


. . 14 


Full term 

Rhode Island 

. . 12 


80 days 

Connecticut . 

. . 14 


Full term 

New York. , 

. . 14 


8 toi2 full 

New Jersey . 




20 weeks 


. . 13 



Entire ses- 

Maryland . 

. . 12 

District of Col 



12 weeks 

West Virginia 

. . 12 



16 weeks 

Kentucky . 

. . 


8 weeks 

Tennessee . 

. . 14 


Alabama . 

. . 


Louisiana . 

. . 14,12 

Ohio . . 

. . 13 



20, 16 weeks 


. . 14 



12 weeks 

Illinois . . 

. . . 14 


16 weeks 

Michigan . 

. . 14 


4 months 

Wisconsin . 

. . 14,12 


12 weeks 

^ Final Report of Industrial Commission, Vol. XIX, p. 921. 


Age under 

Age under 

Age for 

Annual period 


labor in 

labor in 


of compulsory 

factories is 

mines is 





Minnesota . • 

• • 




Entire ses- 

Missouri • . 


North Dakota 



12 weeks 

South Dakota 



12 weeks 

Nebraska . . 





Kansas . . • 

12, 16 


12 weeks 

Arkansas . 


Montana . 



12 weeks 

Wyoming . 



12 weeks 

Colorado . 


12, 14, 16 


20 weeks 

New Mexico 


12 weeks 



12 weeks 

Utah . . . 



20 weeks 

Nevada . . 


16 weeks 

Idaho . . 



12 weeks 




12 weeks 

Oregon . . . 


12 weeks 

California . 







Under the common law a workman was entitled to receive 
damages when injured as a result of the negligence of his em- 
ployers, but he was supposed to assume the ordinary risks 
of the business. When the injury was caused by the work- 



man's own negligence or by the negligence of a fellow-work- 
man, the employer was not responsible. 

The Employers' Liability Act of 1880^ gives the workman 
a right to compensation when the injury was caused (i) by 
reason of any defect in machinery or plant, when this defect 
arose or had not been discovered or remedied owing to the 
negligence of the employer, or of some person intrusted by 
him with the duty of seeing that the plant was in proper con- 
dition ; or (2) by reason of the negligence of any person in 
the service of the employer who had any superintendence 
intrusted to him; or (3) to whose orders the workman was 
bound to conform ; or (4) by reason of the act of any person 
in the service of the employer done in obedience to the in- 
structions of the employer or of any person delegated with his 
authority, providing that there was some fault or defect in these 
instructions ; or (5) by reason of the negligence of any person 
in the service of the employer who had the control of any sig- 
nal, points, locomotive engine, or train upon a railway. But the 
workman is not entitled to damages if he knew of the defect 
or negligence which caused his injury and failed to report it. 

This act is still in force, but the workman has the choice of 
taking advantage of a new law, the Workmen's Compensation 
Act of 1897.2 This is a radical departure from previous legis- 
lation. The employer is now liable to pay damages even 
when there has been no negligence on his own part, and even 
when the accident has been due to the neglect of the injured 
workman himself, except only in cases of " serious and wilful 
misconduct." This liability exists even where the workman 
makes a contract exempting the employer, with the following 

1 This act is printed in full in the Report of the Industrial Com- 
mission, Vol. XVI, pp. 68-70. 

2 Printed in full in the Bulletins of the Department of Labor, 
1901, p. 126, in an article by A. Maurice Low, entitled "The British 
Workmen's Compensation Act and its Operation." The law is also 
printed in the Report of the Industrial Commission, Vol. XVI, p. 71, 
but without the " schedules " giving amount of compensation and 
method of arbitration. 


exception : If the registrar of a friendly society, after taking 
steps to ascertain the views of the employer and workmen, 
certifies that any scheme of compensation is on the whole not 
less favorable to the general body of workmen than the pro- 
visions of this act, the employer may contract with any of his 
workmen that the provisions of the scheme shall be substi- 
tuted for the provisions of this act. An undertaker is liable 
for the injuries also in cases where the work is conducted by 
sub-contractors. He is not liable for an injury which does 
not disable the workman for a period of at least two weeks 
from earning frill wages at work at which he was employed. 

The amount of compensation is as follows : Where death 
results, and the workman leaves dependants wholly dependent 
upon his earnings at the time of his death, the payment is a 
sum equal to his earnings during the three years next preced- 
ing the injury, or the sum of £iSO, whichever of these sums is 
the larger, but not exceeding in any case ;£30o. In case the 
dependants are in part dependent upon his earnings, then a 
reasonable amount not exceeding the maximum is fixed by 
arbitration. If there are no dependants, medical and burial 
costs not exceeding ;^io are to be paid by the employer. 
Where total or partial incapacity for work results from the 
injury, the workman receives a weekly payment during the 
incapacity after the second week not exceeding fifty per cent 
of his average weekly earnings during the previous twelve 
months, if he has been so long employed, but if not, then for 
any less period during which he has been in the employment 
of the same employer, the weekly payment not to exceed £i. 

Under the former act damages for accidents are recovered 
by actions brought in the law courts. This act provides a 
system of arbitration. It is also less broad in its scope ; it 
applies only to workers on or in a railway, factory, mine, 
quarry, or engineering work, and in certain cases to work 
on buildings. By a later act (July 30, 1900^) agricultural 
laborers are included. 

^ Printed in the Bulletin of the Department of Labor in the 
article cited. 




It is a self-evident proposition that if we would 
avert strikes, we must deal with the causes of 
strikes : consequently any fruitful discussion of pre- 
ventive measures must be based upon an analy- 
sis of these causes. What, then, are the causes 
of strikes of wage-earners ? Many different causes 
are enumerated in reports on strikes, but most of 
these are subsidiary causes. The main causes are 
four : namely, first, a desire for higher wages or an 
effort to prevent reduction of wages ; second, meth- 
ods of calculating wages, as by the piece or time, by 
weight or measure, as in case of coal, methods of 
pay as in money or store orders, etc; third, a 
desire for a shorter working day; and fourth, a 
desire to improve the general environment under 
which work is conducted. The first cause is the 
one which appears most frequently in industrial 
disputes; but during the past generation many 
bitter strike conflicts have been waged with ref- 
erence to the length of the working day. In the 
United States, especially, efforts to secure a nor- 
mal working day of eight hours have provoked 


some of our fiercest strikes. The regulation of 
environment has been a relatively infrequent cause 
of strikes, although the matter is one of great im- 
portance. Efforts to secure recognition of labor 
organization, to regulate apprenticeship, etc., are 
subsidiary to the main causes enumerated, and all 
these causes obviously may be reduced to the one 
main cause — a desire on the part of the wage- 
earners to improve their economic position. But this 
desire on the part of wage-earners taking the main 
directions mentioned does not lead to strikes until 
it encounters opposition. If desire were realiza- 
tion, conflict would cease. Now the opposition to 
the realization of desire in the case of the wage- 
earners is found in the attitude of their employers. 
These in turn have their own desires, taking 
frequently an opposite direction; namely, desires 
for a longer working day or lower wages, and they 
also generally find in the economic conditions 
surrounding them sharp limitations of the possi- 
bilities of compliance. Without dwelling longer 
on these preliminary observations, it may be said 
that as a result of conflicting desires and interests, 
which in spite of all fine words are not precisely 
identical, we find arrayed against each other two 
economic classes; namely, the employed and the 
employers. The earners of wages frequently feel 
that the resistance to their aspirations is unjust and 
indefensible, and the wage-payers feel that the 
demands made on them are unreasonable and some- 
times even impossible of fulfilment. A dispute 


exists as to economic rights and privileges, and as 
this dispute is looked upon as a matter of private 
concern chiefly, or even wholly, no regular public 
tribunal for the adjustment of these differences is 
provided, or when one does exist it is not clothed 
with adequate powers. That takes place which 
must, in the nature of things, happen ; namely, an 
attempt to secure the satisfaction of desire by 
force — economic force. The wage-earners cease 
work and endeavor to induce others to refrain from 
taking the places which they have left. Their hope 
is that through the infliction of a penalty on the em- 
ployer, namely, a pecuniary loss, compliance with 
their desires will be forced. The employer, on the 
other hand, trusts that the pressure of economic 
need, which in many cases soon becomes hunger, 
may force the wage-earners to yield to his terms. 
This is a kind of war, and indeed is in popular 
language so called. It is industrial war, and there is 
no doubt that the suffering involved is in proportion 
to the number engaged comparable to that of mili- 
tary warfare ; frequently it is, no doubt, even 
greater. Cripples are left on the field — both 
literally and figuratively. Years after an industrial 
battle, here and there may be found the maimed, 
wrecked existences, and no pensions afford them 
relief. Their suffering continues one of inglorious 
silence. But this strike warfare is domestic. It is 
within the nation. It is civil war. It had been 
supposed that within the nation peace was achieved, 
and that we were moving forward to abolish war- 



fare among nations. Our period is truly one of 

The government has as one of its ends the pres- 
ervation of order and quiet. In early times, quar- 
rels of all sorts were settled directly by physical 
force. Later, as the interest of society in peace 
asserted itself, combats were regulated; and still 
later, as social evolution proceeded, physical vio- 
lence was prohibited, and tribunals were provided 
for the adjustment of large classes of cases, es- 
pecially those relating to rights in property. The 
social interest in the preservation of order, and the 
maintenance of rights, finally advanced to that 
point that certain infractions of law came to be re- 
garded as criminal — as acts directed against soci- 
ety itself. Burglary is not a private affair between 
a burglar and a person burglarized, but a public 
matter, of which the state takes cognizance. And 
means are provided for the settlement of quarrels 
relating to property interests, and adequate force 
is at hand to compel obedience to judicial deci- 
sions. "Contempt of court*' is severely punished, 
because public order and peace turn upon respect 
for judicial decisions as something pivotal. 

This line of thought naturally suggests an ex- 
tension of public authority in such manner that 
provision may be made for the settlement of con- 
troversies between employers and employees. The 
chief point to be borne in mind is that these in- 
dustrial disputes, with their resulting industrial 
warfare, are no longer private matters. In early 


times the private interest was indeed the dominant 
one, because production was chiefly an individual 
matter. Not long ago, over a large section of the 
civilized world, the ideal was the economic self- 
sufficiency of the household. Production and ex- 
change are now social processes, and are no longer 
capable of regulation by individual action. Con- 
solidation of railways has been proceeding rapidly 
for more than a generation, and now, closely con- 
nected with this consolidation, we have our epoch- 
making so-called trust movement. It has now 
come to pass that a few men, so few that they can 
easily be gathered together in a single room, con- 
trol a considerable percentage of all the capital of 
the United States, and direct the employment of 
a large fractional part of the labor power of our 
country. This means economic solidarity such as 
the world has never known before. The differ- 
ence in degree comes to mean a difference in kind. 
The new social character of industry is recognized 
alike by the most conservative economists and the 
most thoughtful masters of men. 

The prevention of strikes means simply this: 
we must open our eyes to the clear implications of 
our growing economic solidarity. The orderly and 
peaceful operation of our industrial mechanism is 
a matter of public concern, and must be secured 
by social action of one sort or another. It is 
suggested by the writer that, as the first step in 
effective efforts to secure industrial peace, the 
industries of the country should be classified with 


respect to the degree of public concern in their 
continuous operation. We may begin with those 
in which the public concern is at the lowest point, 
when we consider industries from our present point 
of view. We place in this category all businesses 
in which the relation between employer and em- 
ployee is essentially individual in character. Farm- 
ing affords the best illustration. The American 
farmer frequently has no employee at all. Many 
farmers have a single male employee, and occa- 
sionally we find farmers with two or more " hired 
men,** as we generally call them in this country. 
The relation of the one who employs and the one 
who is employed is almost universally an individual 
one, and the contract is in the true sense of the 
term an individual contract. There is close per- 
sonal association as a general rule, the farmer and 
his man working together, frequently eating at the 
same table, even if the farmer does look upon 
himself and family as belonging to a superior rank 
in society. Small mercantile and manufacturing 
establishments with two or three employees would 
belong to the same category, unless indeed either 
the employees or employers, or both, belong to 
some larger organization and act with this larger 
organization. In the household the relation be- 
tween mistress and servant, both in the country 
and in the city is similar, except that in the city, 
at least, there is felt to be a greater separation 
in social rank. There is no industry which, as 
a whole, it is more important should be continu- 



ously operated than farming; but the public in- 
terest in any one farm is relatively a very small 
matter. It is desirable that the employers and 
employees who belong to this class should live 
peaceably together, as it is that all men should live 
in peace with one another. The exhortations which 
are found in the Bible and in other sacred writings, 
as well as in the works of the ethical teachers of 
the ages, are here applicable. Eye service is to 
be avoided, and the employer should be considerate. 
The strong must bear the burdens of the weak, 
and a reasonable degree of contentment on the 
part of the employee is a virtue. It is desirable 
that there should be some local board or magis- 
trate to which disputes between employer and em- 
ployee, as well as other disputes, could be referred 
in an informal manner, when parties desire to do 
so. Some practicable plan of conciliation adapted 
to conditions of time and place might perhaps be 
devised. In the Bible Christians are exhorted to 
refer their differences to officers of the church, and 
a plan of procedure is outlined. The difficulty at 
present is, on the one hand, that men are divided 
into so many different sects recognizing no com- 
mon church authority, and on the other that the 
hold of the church upon the masses of men is 
weak. Where, as among the Mormons, a larger 
portion of the population belong to a single relig- 
ious organization, more or less effective measures 
for the maintenance of peace in cases such as we 
have now under consideration are feasible, and it 


is said that among the Mormons great good has 
been accomplished by well-devised plans for the 
maintenance of peace in their relations among 

Where we have large capitalistic enterprises a 
different condition of things greets us. A large 
capitalistic enterprise implies most closely associ- 
ated units of capital power, furnished generally by 
a great many different persons. All those who 
furnish capital act together absolutely as one man 
when they confront their employees. The em- 
ployees are a group by themselves. The size of 
the business unit gives a greater public interest in 
its operation, especially as in such cases the em- 
ployees very generally are associated in unions, 
and to an ever increasing extent the employers are 
associated also in unions of their own. Generally 
speaking, the formation of trade boards of concili- 
ation and arbitration, as sketched in the preceding 
chapter, is a very effective agency in the mainte- 
nance of industrial peace. Sometimes something 
more than these trade boards is required. The 
appeal to these trade boards should be voluntary, 
and the obedience to their decisions should also be 
voluntary. In this second class of industries, which 
would have to be more or less arbitrarily defined as 
comprising all establishments with a given amount 
of capital and a given number of employees, it is 
worth while to give careful attention to the sug- 
gestion of the Industrial Commission that those 
who begin a strike or lockout, without first sub- 



mitting the case to some kind of board of arbi- 
tration, should be liable to fine or other penalty. 
The details would have to be worked out with a 
great deal of care. In addition to voluntary trade 
boards of conciliation and arbitration, state boards 
modelled after the Massachusetts plan are essen- 
tial. Whenever there is any notorious and long- 
continued disturbance of industrial peace, or in 
case of requests from the local or state govern- 
ment, the state board should intervene. The state 
board should be equipped with power to conduct 
investigations, which means, also, power to secure 
the information which is of public importance. 
The report of the case should also be given pub- 
licity. What is here desired is compulsory inquiry 
with publicity. This is sometimes, although with 
scarcely a correct use of language, spoken of as 
compulsory arbitration without the enforcement of 

In a class above this group should be placed 
those industries the continuous operation of which 
is of still greater importance. Here we place 
coal mining and the larger manufacturing con- 
cerns. It again would be necessary to define 
the size of the manufacturing enterprise, or other 
business establishment, which would place it in 
this class. All the great trusts should be treated 
as a single enterprise, although they may have 
factories located in various places, inasmuch as 
each trust combination operates as a unity. In 
this class of industries it is recommended that we 



should have everything short of the absolutely 
compulsory acceptance of the awards of a board 
of arbitration. There should be a heavy penalty 
for a strike or lockout without first going through 
all the prescribed steps to arbitrate the difficulty. 

Naturally, railways, telegraph lines, and gener- 
ally the agencies of transportation and communica- 
tion, together with lighting plants and other so- 
called local " public utilities," belong in a still 
higher class in which the social interest asserts 
itself most vigorously. Here clearly the interest 
of society is paramount, and the duty of preserving 
the continuous operation of these industries is like 
that of the prevention of crime. In other words, 
in these particular cases we should have courts of 
conciliation and arbitration with adequate power to 
settle disputes without a recourse to private indus- 
trial warfare. 

One important consideration is that no public 
board of conciliation and arbitration should ever be 
clothed with so little power as to render it contemp- 
tible. The reasons why a feeble board can accom- 
plish nothing are similar to those which would 
render judges of little use if contempt of court 
were permissible. 

Mention has been made in the preceding chapter 
of President Hadley*s objection to compulsory arbi- 
tration, namely, that it might lead to public owner- 
ship of industries. It is true that we cannot compel 
capital to invest in an industry which is relatively 
unprofitable, and it is also true that boards of arbi- 


tration could make awards which would lead either 
to the withdrawal of private capital or the refusal 
of private capitalists to make further investments 
in the industry placed under compulsory arbitration. 
Is there, however, a probability that compulsory 
boards would make awards of this sort ? A board 
with such powers would be comparable in its impor- 
tance to the Supreme Court of the United States, 
and if it were established it is to be supposed that 
men of like integrity and capacity would be ap- 
pointed. Certain rules would have to be worked 
out concerning equity in distribution, and such 
rules, as a matter of fact, are gradually being 
evolved by legislative bodies and courts in this and 
other lands. The Irish land courts may be cited 
as an example, for it has been their function in the 
determination of land rents to distribute the product 
between labor, capital, and land, and even if the 
results are by no means entirely satisfactory, those 
who read the decisions will see that a beginning 
has been made in the elaboration of rules for equi- 
table distribution. With the increase in monopolies, 
the legislatures and courts are to an ever increasing 
extent fixing fair wages and fair prices. One thing 
which is obviously impracticable is that arbitration 
should always mean a compromise between demands 
on the two sides, for if that were the case there 
would be a continual increase in wages, and an 
encouragement of ungrounded demands. 

Economic theory is concerning itself with prin- 
ciples which can be made the basis of the awards 



of boards of arbitration. Professor John B. Clark 
has worked out a theory of wages which, in his 
opinion, enables us to ascertain the true product 
of labor, which should be then assigned to labor. 
What labor receives under perfectly free compe- 
tition, " with labor ideally mobile " is, he says, the 
true product of labor. " The really natural standard 
of pay lies between the amount that idle men may 
here and there consent to take and the amount that 
a union which guards its monopoly by force may be 
able to extort ; and it lies at about the level of what 
a union that is extended and efficient but not monop- 
olistic can get. The standard that is so indicated 
would be one which well-constituted courts would 
recognize. They would not give the smallest 
amounts that would be accepted by destitute men 
nor the largest amounts that an exclusive union 
might extort, but would rather give about what 
men in a normal union could produce and get; 
and there is little doubt that in thus acting they 
would keep the pay of labor at least as near its 
natural level as it now is. They would afford some 
approach to the state in which the shoemaker 
would get his fair share of the value of the shoe 
made in the mill that employs him, in which 
miners would get a fair share of the value of 
coal, and weaves a just portion of the value of 
cloth." ^ Professor Clark would have the unions 
freely admit all qualified workers in tlneir respective 

1 Vide Professor John B. Clark*s article " Is Authoritative Arbi- 
tration Inevitable?" Political Science Quarterly, December, 1902. 

2C 385 


branches, and would favor measures opposed to 
monopoly privileges for any class of wage-earners 
secured by limiting the number of men allowed to 
learn and practice the various crafts. His idea is 
to remove alike the monopoly element from labor 
organization and capital organization in order to 
secure fair distribution, and courts of arbitration, 
he thinks, should attempt to ascertain the actual 
product of labor in the manner which he describes. 

While there are many who will not accept this 
theory of wages, there are other methods which, as 
already indicated, are being elaborated for deter- 
mining fair wages and fair profits. The great 
point is that the movement is not merely theoretical, 
but actually in progress. Doubtless also, even if 
boards of arbitration might have varying views 
concerning the true theory of wages, they would, 
if composed of competent men, reach similar results 
in the actual awards. 

Furthermore, it may be inquired whether there 
is not greater danger of an undue extension of 
public ownership if present conditions are allowed 
to continue unchecked. Certainly public owner- 
ship in the United States never received so great 
a stimulus as that given it by the strike in the 
anthracite coal regions in Pennsylvania in 1902. 

The position which we are now considering 
takes for granted that public ownership is not 
desirable, but it is legitimate to raise the question 
to what extent public ownership, either temporarily 
or permanently, is desirable. It is at least possible 


that, in mining, the Prussian system of public 
ownership of the treasures below the surface of 
the earth with private operation, or possibly a 
mixed system of public and private operation, as 
in Prussia, would be desirable. Grounds have 
already been given for the view that public owner- ^ 
ship of local public utilities, so called, is the ideally 
correct system. Into all this we do not propose to 
enter, at the present time. 

We observe two contradictory tendencies among 
us. There is undoubtedly a certain toleration of 
lawlessness on the part of strikers, as Professor 
Clark has well said, and the reason for this is that 
there is a general feeling that the rights of labor 
are not adequately protected. Most men feel that, 
confronted by the vast corporations of our day, the 
workingmen do not receive their fair share of the 
product, and that they are subject to grave abuses. 
The absence of satisfactory industrial tribunals to 
secure justice is an encouragement to this unfortu- 
nate feeling. On the other hand, there is a sur- 
prising toleration of the astonishing extension of 
the use of injunctions. We have now before us 
three leading cases of this kind. We have, in the 
first place, the Ann Arbor case, in which Judge 
Ricks enjoined the chief of the Brotherhood of 
Locomotive Engineers from ordering a strike.^ 
Second is the injunction by Judge Jenkins when 

1 Ann Arbor & North Mich. Ry. Co., et al. v. Penn. Co., et al., 
54 Fed. Rep. 730, opinion of Circuit Judge Taft; and same volume 
746, opinion by District Judge Rich, adjudging a locomotive en- 



the Northern Pacific Railroad was in the hands of 
receivers. Judge Jenkins ordered the employees 
J not to enter into any combination with a view of 
quitting the service of their employers.^ A part 
of the order of Judge Jenkins was reversed by the 
Circuit Court of Appeals, and a part of it was al- 
lowed to stand.2 Then, in the third place, we have 
the restraining order of Judge Adams, of the 
United States District Court of St. Louis, in March 
of the current year, in the case of the employees of 
the Wabash Railway Company. The restraining 
order enjoins officers of various organizations of 
railway employees from "ordering, coercing, per- 
suading, inducing or otherwise causing, directly 
or indirectly, the employees of the said Wabash 
Railway Company to strike or quit the service of 
the said railway company.** In an opinion de- 
livered April I, 1903, Judge Adams denied the 
motion for a preliminary injunction and vacated 
the ad interim restraining order.^ A restraining 
order or temporary injunction, however, may ren- 
der the case of the employees hopeless, discourag- 

gineer in contempt for refusing to handle cars of a connecting 
railway company in disobedience to a previous injunction. 

1 Farmers Loan & Trust Co. v. Northern Pacific Ry. Co., et al., 
April I, 1894. 60 Federal Reporter, 803. 

2 Arthur, et al. v. Oakes, et al., Circuit Court of Appeals, 
seventh Circuit, October i, 1894, 60 Fed. Rep. 310. Opinion by 
Harlan, Circuit Justice. 

8 Circuit Court of the United States for the Eastern Division of 
the Eastern District of Missouri. Wabash Railroad Co. v. John J. 
Hannahan, et al. 



ing them at the outset and giving the employers 
every opportunity to prepare for the strike if the 
injunction is maintained. It avails not that the 
employees may quit one by one, because one by 
one they are comparatively helpless. We have to 
do here, not with individual bargaining, which is 
out of the question. We have great groups of 
workingmen treating with an immense amount of 
highly organized capital 

Why is it that we find this toleration of injunc- 
tions? It is the reverse of the picture which is 
presented to us in the toleration of a certain 
degree of violence in the case of strikes. It is 
felt that the continuous operation of the railways 
is a matter of paramount consideration, and that 
individual interests must not stand in the way of 
the general social interest, but it is impossible to 
hope that workers can permanently be forced to 
continue their services or be restrained from seeking 
their interests in organization, and by the effective 
use of organization to attain their purposes. The 
injunctions which have been recently so numerous, 
and which have been so sweeping, can hardly be re- 
garded as otherwise than a first step already taken 
in the direction of compulsory arbitration. 

We have had strikes in model establishments, 
and the recent case of the National Cash Register 
Company at Dayton, Ohio, is especially painful to 
altruistically inclined people. Yet it was never 
reasonable to suppose that in our democratic age 
benevolence alone could avert strikes. The develop- 


ment of ideas of justice and the establishment of 
agencies to secure mutual justice between em- 
ployer and employed must be placed in the first 
rank. Let benevolence then be added to justice. 
One thought more, even if it is a virtual repeti- 
tion of what has already been said : The era of 
individual bargaining has passed away in trans- 
portation, and is very nearly a thing of the past in 
all large-scale production. We must adjust our- 
selves to collective bargains between organized 
labor on the one hand, and organized capital on 
the other. Not suppression of organization, but 
regulation of organization, must be our watchword. 


A voluminous literature has appeared on this 
subject, but a considerable part of it consists of 
reports not easily accessible, and most of it was 
written too long ago to take account of present 
forces, and consequently it does not wholly apply 
to the conditions which now exist. A few refer- 
ences only will be given, but these are sufficient 
for the general reader. 

Lowell, Josephine Shaw, Industrial Arbitration and Con- 
ciliation. New York. 1894. 

Price, L. L. F. R., Industrial Peace. London, 1887. This 
work has a preface by Professor Alfred Marshall, and, 
like the preceding book, gives a very good survey of 
conditions then existing, with an argument for concilia- 
tion and arbitration based upon these conditions. 

Lloyd, Henry D., Newest England. New York, ipoc^- 
Describes compulsory arbitration in New Zealand. 



Wright, Carroll D., Industrial Conciliation and Arbitra- 
tion. Boston, i88!. This was compiled, as we are told 
on the title-page, from material in the possession of the 
Massachusetts Bureau of Statistics of Labor, by direction 
of the Massachusetts legislature. Especial attention is 
given to the arrangements then existing in England and 
in Massachusetts. 

For present purposes, probably the best single work is 
the Report of the National Conference on Industrial Con- 
ciliation held under the .auspices of the National Civic 
Federation in New York City, December, 1901. In De- 
cember, 1902, another conference was held which was 
called simply Industrial Conference. We find concilia- 
tion and arbitration taking a prominent position among 
other topics discussed. The National Civic Federation 
(Mr. Ralph M. Easley, secretary ; address, Fourth Avenue 
and 22d Street, New York City) has given special atten- 
tion to industrial conciliation and arbitration, and has 
undoubtedly exercised a strong influence in favor of 
voluntary methods, and those who have taken part in 
the conference have generally opposed what is, strictly 
speaking, compulsory arbitration, although compulsory in- 
vestigation has been strongly favored. See, for example, 
the address in the volume of Proceedings of the Indus- 
trial Conference, by Hon. Charles Francis Adams, entitled 
Investigation and Publicity as opposed to Compulsory 
Arbitration. In this same volume, the address by Pro- 
fessor John Graham Brooks, entitled Trade Agreements, 
deserves special attention. 




The following is given as one t)rpe of a trade agreement. 
It illustrates collective bargaining between the employer and 
associated trade-unions, which is a step beyond bargaining 
between an employer and a single trade-union.^ 

Agreement between Chicago Typographical Union No. 
1 6 AND Allied Printing Trades and the Interocean 
Publishing Company. Signed March 22, 1899. 

This agreement, made and entered into this 22d day of 
March, 1899, by and between the Interocean Publishing Com- 
pany, through its authorized representatives, the party of the 
first part, and the subordinate unions of the International 
Typographical Union of the City of Chicago, consisting of 
Chicago Typographical Union No. 16, Chicago Stereotypers' 
Union No. 4, Chicago Mailers' Union No. 2, and Chicago 
Photo-engravers' Union No. 5 ; and the subordinate unions 
of the International Printing Pressmen and Assistants' Union, 
consisting of Chicago Newspaper Web Pressmen's Union No. 
81 and Chicago Assistants and Web Press Helpers' Union 
No. 4, by their committees duly authorized to act in their be- 
half, parties of the second part, 

WITNESSETH, that from and after Wednesday, March 22, 
1899, and for a term of five years, ending March 22, 1904, and 
for such a reasonable time thereafter (not exceeding thirty 
days) as may be required for the negotiation of a new agree- 
ment, the newspaper represented by the said party of the first 
part binds itself to the employment, in its composing room 
and the departments thereof, of mechanics and workmen who 

^ For this agreement the writer is indebted to Dr. Margaret A. 
SchafiFner, instructor in economics and sociology, University of Iowa. 
It forms part of her exhaustive, but as yet unpublished, monograph 
on "The Labor Contract." 



are members of Chicago Typographical Union No. i6; in its 
stereotyping room to stereotypers who are members of Chicago 
Stereot5rpers' Union No. 4 ; in its mail room to mailers who 
are members of Chicago Mailers' Union No. 2 ; in its photo- 
engraving department to photo-engravers who are members 
of Chicago Photo-engravers' Union No. 5 ; in its press room 
to pressmen and assistants who are members of Chicago 
Newspaper Web Pressmen's Union No. 81, and Chicago 
Assistant Web Pressmen and Helpers' Union, and agrees to 
respect and observe the conditions imposed by the constitu- 
tions, by-laws, and scales of prices of aforesaid organizations, 
copies of which are hereunto attached and made a part of this 

And it is further agreed that aforesaid constitutions and 
by-laws may be amended by said parties of the second part 
without the consent of the party of the first part : provided, 
however, that such changes do not in any way conflict with 
the terms of the scales and rules as set forth in this contract. 

It is further agreed that the scale of prices of the Chicago 
Typographical Union No. 16, adopted March 17, 1897, shall 
continue without change, during the life of this contract, ex- 
cept as may be mutually agreed between the parties hereto. 

A standing committee of two representatives of the party 
of the first part, and a like committee of two representing the 
parties of the second part, shall be appointed ; the committee 
representing the parties of the second part shall be selected 
by the union whose interests are directly affected ; and in case 
of a vacancy, absence, or refusal of either of such representa- 
tives to act, another shall be appointed in his place, to whom 
shall be referred all questions which may arise as to the scale 
of prices, the construction to be placed upon any clauses of 
the agreement, or alleged violations thereof, which cannot be 
settled otherwise, and that such joint committee shall meet 
when any question of difference shall have been referred to it 
for decision by the executive officers of either party to this 
agreement, and should the joint committee be unable to agree, 
then it shall refer the matter to a board of arbitration, the 



representatives of each party to this agreement to select one 
arbiter, and the two to agree upon a third. The decision of 
this board shall be final and binding upon both parties. 

The party of the first part hereby agrees that he shall not, 
during the continuance of this agreement, introduce into his 
composing room any font of type that shall be leaner than the 
leanest corresponding type now in use in any one of the offices 
in the city of Chicago ; provided, that if any font of type 
leaner than the leanest corresponding type now in use by the 
party of the first part, but up to the International Typographi- 
cal Union standard, shall be introduced by the party of the 
first part, the difference in measurement between the type in- 
troduced and its corresponding type now in use shall be given 
to the compositor. 

It is agreed that should the International Typographical 
Union and the American Newspaper Publishers' Association 
mutually adopt a new standard for the measurement of type, 
said standard shall be used in the Interocean office under the 
jurisdiction of the parties to this agreement, and that, if said 
standard shall necessitate a new scale of wages, said scale 
shall, if possible, be fixed by the Joint Standing Committee 
of the two parties to this agreement ; and that, should said 
committee fail to agree, the question shall be submitted to a 
board of arbitration, as above provided for, the decision of 
said board to be binding upon both parties to this agreement. 

It is further agreed by the party of the first part that in the 
event of the substitution of machines other than the Linotype, 
for hand composition or distribution, a scale of wages may be 
agreed upon by the joint committee of the parties to this 
agreement ; but if no satisfactory conclusion can be reached, 
the matter shall be referred for final settlement to a board of 
arbitration as above provided for. 

It is agreed by the said parties of the second part that for 
and in consideration of the covenants entered into and agreed 
to by said party of the first part, the said parties of the second 
part shall at all times during the life of this agreement truly 
and faithfully discharge the obligations imposed upon them 



by furnishing men capable of performing the work required 
in the various mechanical departments of the party of the 
first part. 

It is agreed that both the language and the spirit of this 
contract between the Interocean Publishing Company, party 
of the first part, and the organizations known as Chicago 
Typographical Union No. i6, Chicago Stereotypers' Union 
No. 4, Chicago Mailers' Union No. 2, and Chicago Photo- 
engravers' Union No. 5, being trade-unions chartered by and 
under the jurisdiction of the International Typographical 
Union, an organization having its headquarters at Indianap- 
olis, Indiana, and Chicago Newspaper Web Pressmen's Union 
No. 81, and Chicago Assistants and Web Pressmen and Help- 
ers' Union, organizations chartered by and under the jurisdic- 
tion of the International Printing Pressmen and Assistants' 
Union of North America, by their committees duly authorized 
to act in their behalf, parties of the second part, make it im- 
peratively obligatory on both parties whenever any difference 
of opinion as to the rights of the parties under the contract 
shall arise, or whenever any dispute as to the construction 
of the contract or any of its provisions takes place, at once 
to appeal to the duly constituted authority under the contract, 
viz., the Joint Standing Committee, to the end that fruitless 
controversy shall be avoided and good feeling and harmonious 
relations be maintained, and the regular and orderly prosecu- 
tion of the business in which the parties have a community 
of interest be insured beyond the possibility of interruption. 

It is further stipulated and agreed that the party of the first 
part shall not now or during the life of this contract enter into 
any association or combination hostile to the printing trade- 
unions, nor shall it at any time render assistance to such hos- 
tile combination or association by suspension of publication 
or any other act calculated to injure the printing trade- 

And the party of the second part hereby agrees to enter 
into no combination or association with the intent or purpose 
of injuring the Interocean Publishing Company or its prop- 



crty, and shall not be a party to any hostile act with simUar 

In witness whereof, we have hereunto set our hands and 
seals this 22d day of March, 1899. 

The Interocean Publishing Company, 

By W. F. FuRBECK, President. 
Wm. Penn Nixon, Secretary* 
Chicago Typographical Union No. 16, 
By John McParland. 
A. C. Rice. 
Chicago Stereotypers' Union No. 4, 

By R. B. Prendergast. 
John S. Healy. 
Chicago Mailers' Union No. 2, 

By J. J. Kinsley. 
Wm. McInerney. 
Chicago Photo-engravers* Union No. 5, 
By J. S. Falkinburg. 
G. A. Gink. 
Chicago Newspaper Web Pressmen's Union No. 81, 
By Thos. P. Fitzgerald. 
E. W. Carr. 
Chicago Assistants and Web Press Helpers' Union 

No. 4. 

By P. C. McKay. 
William E. Hill. 

This contract is entered into by and with the consent of 
the International Typographical Union, an organization to 
which the party of the first part concedes jurisdiction and 
control over trade organizations in all mechanical departments 
of the party of the first part, with the exception of the press 
room ; and this contract is entered into by and with the con- 
sent of the International Printing Pressmen and Assistants' 
Union of North America, to which organization the party of 
the first part concedes jurisdiction over trade organizations 
controlling all employees of the press room, and the Interna- 



tional Typographical Union, through its authorized representa- 
tive, and the International Printing Pressmen and Assistants' 
Union, through its authorized representative, do hereby sev- 
erally agree to protect the party of the first part in case of 
violation of the agreement by any of the said parties of the 
second part under the respective jurisaiction of said inter- 
national unions, but such unions shall not be guarantors as to 
each other. 

In witness whereof. We have hereunto set our hands and 
seals, this 22d day of March, 1899. 

S-A-MUEL B. Donnelly, 
President International Typographical Union, 

James H. Bowman, 
President International Printing Pressmen and 
Assistants'* Union. 

John G. Derflinger. 




The year 1776 is an epoch-making date in the 
history of liberty. Every American associates 
1776 with the Declaration of Independence, which, 
however we may look upon it — and all modem 
criticism, just and unjust, to the contrary, notwith- 
standing — ranks among the greatest and grandest 
documents of the world's history. It is there 
asserted, as something axiomatic, as something 
belonging to the realm of natural law, that liberty 
is an inalienable right of all men. You all recall 
the precise words : " We hold these truths to be 
self-evident ; that all men are created equal, that 
they are endowed by their Creator with certain un- 
alienable Rights, that among these are Life, Liberty 
and the pursuit of Happiness." It is further- 
more asserted that the very purpose of the insti- 
tution of government is to secure these rights, 
and that every government derives its just powers 
from the consent of the governed. 

But the year 1776 witnessed the appearance of 
a book which so admirably presented the eigh- 
teenth century philosophy of industrial liberty, 
that by common consent of the intelligent it 



ranks among the world's greatest books. I refer 
to Adam Smith's " Wealth of Nations," which 
occupies a pivotal position in modern economic 
thought, earlier works preparing the way for this 
masterpiece, and subsequent works in economics 
resting upon the " Wealth of Nations " as a founda- 
tion. So profound has been its influence that the 
centennial of its appearance was deemed worthy 
of a celebration. Placing it below the Declaration 
of Independence in its power over human destinies, 
nevertheless, I dare to place it in the first rank of 
publications which deal with human liberty. 

The spirit of the age in which he wrote breathes 
through Adam Smith's "Wealth of Nations." 
This spirit is a world spirit, and the age is cosmo- 
politan. This spirit finds its most logical, its clear- 
est and fullest expression in the French philosophy 
and the French public life of the latter part of the 
eighteenth century. Liberty, equality, and frater- 
nity are made the watchwords of the republic. 

When we examine the treatment of liberty in the 
great historical works of this age, we must be im- 
pressed with the simplicity of the problem of liberty 
as then conceived. Liberty is thought of as a unity, 
and not as a complex conception, or bundle of 
rights. Moreover, we find that liberty is presented 
in its negative aspects. Restrictions and restraints 
are found upon liberty, and it is thought that once 
we clear these away, liberty will assert itself as a 
benign force. 

As in the motto of the French republic, so in the 


Declaration of Independence, and in Adam Smith's 
"Wealth of Nations," liberty is associated with 
equality. Natural equality is held to be a funda- 
mental fact, and not by any means a goal to be 
reached slowly and painfully. Adam Smith looks 
upon the bricklayer and the statesman as equal 
in nature, holding that the vast differences between 
them are due to the varied effects of environment. 
Had the environment been changed, the statesman 
would have been the bricklayer and the brick- 
layer the statesman. This theory of equality runs, 
as a red thread, through the entire social philoso- 
phy of that age, and must be borne in mind by one 
who would understand the theoretical and practical 
conclusions re^ched^by that philosophy. The prob- 
lem which presented itself to our forefathers, and 
to French statesmen, as well as to English think- 
ers, was essentially negative. Restrictions must be 
removed. Favoritism must be abolished, and the 
laws making possible restrictions and favoritism 
must be repealed. The restrictions upon liberty 
which were then noticed were restrictions of a 
political nature. Consequently the problem of 
liberty was conceived to be essentially a political 
problem, as well as a negative one. 

Closely associated with this doctrine of equality 
was the doctrine of the beneficence of self-interest. 
Inasmuch as men were essentially equal, each one 
could best guard his own interests individually, 
provided only the hampering fetters of the law 
should make way for a reign of liberty. Time 



does not permit me to follow out, as I should like, 
the development of this negative view of liberty, 
which I have presented. From it we may trace 
out a very clearly marked line of evolution of 
thought, and a somewhat less clearly marked line 
of evolution of political practice. Through va- 
rious writers we reach Herbert Spencer's treatment 
of liberty as a negative and political problem. The 
great enemy of freedom, he holds, is the state mani- 
festing itself in laws directing human activity, and 
in his opinion leading inevitably to slavery, unless 
the flow of legislation is in some way checked. 
We find Herbert Spencer preaching his doctrine 
of liberty in his "Social Statics "in 1851, and 
asserting in it the right of man to disregard the 
state, and in more recent times he expounds his 
doctrine in articles bearing such titles as these : 
"The Coming Slavery," "The Sins of Legisla- 
tors," " The Great Political Superstition." 

It is but one step from Herbert Spencer to philo- 
sophical anarchy which in the interests of liberty 
would abolish the state altogether. We thus reach 
the termination of one line of logical evolution of 
liberty, conceived negatively, as something which 
may exist if political restraints and restrictions 
upon action are once removed. Very early, how- 
ever, those whose interests led them to approach 
social and economic questions from a different 
point of view, as well as those who examined the 
problem of liberty more broadly and deeply, began 
to qualify the theory of liberty which we have just 
2D 401 


examined. John Stuart Mill occupies an interest- 
ing position in the development of the philosophy 
of liberty, as in him we see radically antagonistic 
views struggling with each other for mastery. He 
was brought up a firm adherent of the eighteenth- 
century social philosophy, but was obliged to qual- 
ify it increasingly, as he grew older and gained 
larger knowledge as a result of broadening expe- 
rience and deeper thought. On the one hand, in 
the interests of liberty he would prohibit lifelong 
marriage contracts. On the other hand, he sees 
the limitations imposed upon freedom of action in 
the social and economic order, and looks forward 
to a time of collective ownership of land and capi- 
tal, although he does not profess to see how this 
collective ownership is to be managed so as to 
avoid new restrictions upon liberty. 

Another stage in the ' development of thought 
is clearly reached in the writings of the English 
philosopher, Thomas Hill Green,^ who breaks away 
altogether from the conception of liberty as some- 
thing to be achieved by negative, political action, 
holding that true liberty means the expression of 
positive powers of the individual, and that it can 
be reached only as a result of a long and arduous 
constructive process. Green tells us in these 
words what he means by liberty or freedom : " We 
do not mean merely freedom from restraint or 
compulsion. We do not mean merely freedom to 

1 T. H. Green, " Liberal Legislation and Freedom of Contract," 
Works, Vol. Ill, pp. 365-386. 



do as we like irrespectively of what it is that we 
like. We do not mean a freedom that can be 
enjoyed by one man, or one set of men, at the 
cost of a loss of freedom to others. When we 
speak of freedom as something to be highly 
prized, we mean a positive power or capacity of 
doing or enjoying something worth doing or en- 
joying, and that, too, something that we do or 
enjoy in common with others. We mean by it a 
power which each man exercises through the help 
or security given him by his fellow-men, and which 
he in turn helps to secure for them. When we 
measure the progress of a society by the growth 
in freedom, we measure it by the increasing 
development and exercise on the whole of those 
powers of contributing to social good with which 
we believe the members of the society to be 
endowed; in short, by the greater power on the 
part of the citizens as a body to make the most 
and best of themselves." 

As anarchy gives us the logical outcome of one 
line of thought concerning liberty, so we find 
another line of thought regarding liberty, going 
far beyond the necessary implications of Green's 
position, and terminating in the opposite extreme 
— socialism. 

As Adam Smith's philosophy of liberty is an 
expression of the eighteenth century, Thomas 
Hill Green's view may be looked upon as an 
expression of the philosophy of liberty with which 
the twentieth century opens. There are various 



reasons for this change of view. One of the 
most fundamental is, perhaps, found in the fact 
that we have discovered human nature to be a 
more complex thing than it was thought to be in 
the last quarter of the eighteenth century. In- 
stead of a very simple psychology, We have a very 
complex psychology underlying our twentieth-cen- 
tury thought. Inequalities among men we now 
know are natural, or the natural outcome of the 
kind of a world in which we live, inhabited by 
our kind of beings. Men are what they are as a 
result of heredity, as well as environment. More- 
over, we have a heredity of environment itself, 
which is felicitously termed social heredity. The 
outcome of this is found in the fact now clearly 
perceived by those who think deeply on such 
subjects, that in contract men who are in one 
way or another unequals, face each other, and 
that their inequality expresses itself in the con- 
tracts which determine their economic condition. 
Another cause of the change in view concerning 
the achievement of liberty is found in the grow- 
ing complexity of society, especially on its eco- 
nomic side. Men are brought into society in a 
real and vital sense by the relations existing among 
them, and these relations have multiplied enor- 
mously during the past century. The economic 
ties uniting men in society were relatively few 
and simple in 1776. Their growth, extensively and 
intensively, is a matter of familiar knowledge at 
the present time. It is a mere truism to say that 



our well-being in industrial matters depends on 
others, as well as on ourselves. Our economic 
well-being is an outcome of satisfactory relations 
existing between the individual and society. Now 
these relations which bind man to his fellow-men 
are to only a limited extent of a political nature. 
Consequently it follows that restrictions upon lib- 
erty are, for the most part, outside of and beyond 
government. Furthermore, the problem of liberty 
is only to a minor extent a political problem. And 
as it is only to a minor extent a political problem, 
it can never, in any true sense, be secured by a 
mere repeal of political laws, nor indeed by a mere 
enactment of political laws. Neither removal of 
politico-economic restrictions upon freedom of 
trade, nor enactment of universal suffrage, can 
give us more than a small fractional part of 

Our own familiar, everyday experience teaches 
us that restrictions upon our positive liberty of 
action are mainly due to the coercion of economic 
forces. This coercion of economic forces manifests 
itself in many ways, but largely in and through 
contract competitively formed. This is seen, first 
of all, in what may be called the problem of the 
twentieth man. Nineteen men wish to pursue a 
certain course of economic action, but are coerced 
competitively by the twentieth into a line of con- 
duct which they dislike. Nineteen barbers in the 
city of Madison, Wis., wished to close their shops 
on Sunday; the twentieth wpuld not agree to 



close his, and consequently all the twenty were, 
and still are, kept open. Nineteen men may desire 
to work ten hours a day, and may be coerced by 
the twentieth into working fourteen hours a day. 
Apparently they are all working fourteen hours a 
day because they choose to do so ; but the choice is 
not a free one, in any true sense of the word. Even 
the twentieth man prefers to work ten hours a day, 
but yields to pressure for the sake of a temporary 
advantage, and so he is likewise coerced. The 
freedom which thus expresses itself in contract is 
in certain cases like the freedom of a slave, who 
chooses to work rather than to suffer under the 

The coercion of economic forces is largely due 
to the unequal strength of those who make a con- 
tract, for back of contract lies inequality in 
strength of those who form the contract. Contract 
does not change existing inequalities and forces, 
but is simply the medium through which they find 
expression. Wealth and poverty, plenty and hun- 
ger, nakedness and warm clothing, ignorance and 
learning, face each other in contract, and find ex- 
pression in and through contract. According to 
the theory of Pufendorf, one of the great jurists of 
his day, slavery is, historically, an outcome of con- 
tract. I do not think, myself, that this is a correct 
view of slavery as a whole ; but it unquestionably 
explains slavery in many instances. Even in our 
own day contracts have been formed which have 
been denounced from the bench as virtual slavery. 



I have in mind particularly the well-known cases 
which, in the present year, were brought before 
Judge W. C. Bennett in Columbia, S.C. It 
appears in the statement of the case by the Judge 
that negroes entered into contracts whereby they 
surrendered nearly, if not quite all, those rights 
which we associate with a condition of freedom. 
The form of the contract includes the following : — 

" I agree at all times to be subject to the orders and 

commands of said or his agents, perform all 

work required of me or his agents shall have 

the right to use such force as he or his agents may deem 
necessary to compel me to remain on his farm and to per- 
form good and satisfactory services. He shall have the 
right to lock me up for safekeeping, work me under the 
rules and regulations of his farm, and if I should leave his 
farm or run away he shall have the right to offer and 
pay a reward of not exceeding $2^ for my capture and 
return, together with the expenses of same, which amount 
so advanced, together with any other indebtedness, I may 

owe at the expiration of above time, I agree 

to work out under all rules and regulations of this con- 
tract at same wages as above, commencing 

and ending . 

"The said shall have the right to transfer 

his interest in this contract to any other party, and I 
agree to continue work for said assignee same as the 
original party of the first part." 

Judge Bennett, in addressing- his grand jury, 
declared that this nominally free contract " reduced 
the laborer to a position worse than slavery." In 



charging the grand jury he said, " No free man in 
this commonwealth nor any other free country can 
be permitted, even if he desires to do so, to barter 
away his liberty and make himself a chattel ; and 
that is what this contract attempts to do." The 
Judge spoke of it as most pitiful of all that the 
poor negroes who had formed such a contract 
should profess " to be satisfied and contented." 

The sale of children by their parents in times of 
distress is a frequent phenomenon in many Oriental 
countries ; and prostitution and slavery can in those 
countries even to-day often be traced back to con- 
tracts of one sort or another. 

We have in these instances a very extreme form 
of the inequality expressed in and through contract, 
nominally free. What is seen in these cases in 
extreme form can be seen in lesser degree on 
every hand, even in the most civilized nations.^ 
We see from all this that contract gives expression 
to inequalities, and allows existing social forces to 
flow on, involving in some cases a perpetuation and 
deepening of degradation. 

Furthermore, we have lying back of free contract 
the great institutions of society, property, and the 
inheritance of property, and vested interests. In 
short, all that passes down from generation to 
generation lies back of contract and expresses 
itself in and through contract. 

As a result of the nature of man, of the condi- 

1 The Outlook in its issue of July i6, 1898, has this to say of the 
contract labor system in Hawaii, " A contract labor system is in 



tions of existence in a world like ours, and of the 
great historical institutions which have come down 
to us, men exist in classes. These classes, in 
modern times, rest upon an economic foundation. 
Even the political classes of earlier days had, in 
the beginning, an economic basis; but the older 
political classes are, in our day, a comparatively 
small matter. 

The existence of classes, which is absolutely 
necessary, resting upon a foundation beyond the 
power of man to control, gives complexity to our 
problem of liberty. A modern jurist^ has used 
these words, which have a profound significance in 
our discussion of the problem of liberty, "There 
is no greater inequality than the equal treatment 
of unequals.*' 

The problem of liberty includes the problem of 
suitable control over the relations which exist 
among men ; for these relations determine the 
conditions of our social existence. These relations 
may be considered individually and socially, and 
the social action may be either of private or pub- 
lic character. The action of a trade-union in its 
endeavor to secure favorable relations is private 

existence in the island which differs only in one degree from slavery 
— a labor system wholly opposed to American ideas.** 

1 Professor Anton Menger, of the University of Vienna. 

One finds a similar thought admirably expressed by Aristotle in 
his Politics (III, 9, § i) where he says, "Justice is thought ... to 
be and is equality; not, however, for all, but only for equals. And 
inequality is thought to be, and is, justice ; neither is this for all, 
but only for unequals.** 



social action ; a statute determining the length of 
the working day is public social action ; and both 
alike aim, successfully or unsuccessfully as the 
case may be, to promote liberty. All action which 
endeavors to remove ignorance and superstition 
and to strengthen the individual, mentally, morally, 
and physically, is action which endeavors to pro- 
mote liberty. Necessarily, social action which de- 
termines or regulates in any way the relations of 
men among themselves must restrict freedom of 
movement at some point, but where it is wise it 
increases it more than correspondingly at other 
points. If we have restriction upon liberty called 
2^, we have in the case of wise social action an 
increment of liberty which is certainly 2a plus 
something else. The employer may not hire the 
services of little children, and his liberty to do so 
is restricted ; but the liberty of the children is in- 
creased. They are freed from toil, and when 
provision is made for their wise education and up- 
bringing, their powers are increased, and they have 
many fold the liberty to employ themselves in the 
service of their fellows for their own benefit. 

We thus have a vast body of legislation in and 
through which society seeks liberty. This legis- 
lation modifies and qualifies nominally free con- 
tract, because nominally free contract may mean 
servitude of various kinds and various degrees. 
The aim is the increase of liberty in the positive 

Education is one of the lines along which modern 


society works to secure liberty. It cultivates and 
enlightens the mind, frees it from enslaving super- 
stition; and where it is industrial, it cultivates 
economic powers and aids us in adjusting ourselves 
in the relations of complex economic society. 

Modern legislation, even reluctantly and against 
the force of prejudice, recognizes increasingly the 
existence of classes, and the inequalities of powers 
among human beings. We have one great class 
in the community, children, for whom we have 
special laws. Women are another great class, 
with a nature different from that of men, and with 
special needs of their own. We have the farmers, 
we have the class of men engaged in transporta- 
tion, the men who work for wages, all with their 
special needs and peculiarities, finding expression 
in laws applicable to the class to which they be- 
long. To use an expression of Judge Cooley in 
his " Constitutional Limitations," we have here sim- 
ply the recognition of " distinctions that exist in 
the nature of things." 

It would be interesting, if time permitted, to 
show how many different kinds of legal inequality 
there may be where we have nominal legal equal- 
ity. I can refer here only briefly to one or two 
points. We have inequality in power to secure 
needed laws. Consequently we have societies and 
social action in order to secure needed legislation 
for those who by themselves are not strong enough 
to gain the ends sought. The street-car employees 
of Baltimore, some years ago, desired to have their 



hours of labor reduced from seventeen hours and 
twenty minutes a day to twelve hours, and by 
social action, in which many of the men of Balti- 
more, most eminent in church and state and in 
private fields, participated, a twelve-hour day was 

There is inequality on account of the knowledge 
of law on the part of the various classes, and in 
the power to avail one's self of the law. Conse- 
quently, we have societies formed to remedy this 
evil, and to promote that liberty which comes from 
balanced powers. We have our bureaus of justice 
and our legal aid societies. 

And another thing. We have an immense mod- 
em development in this country of the police 
power of the state, as this power is most infelici- 
tously termed. We mean, as every one versed in 
the elements of law knows, the general welfare 
power of the state, restricting and limiting con- 
tract in the interests of freedom. This develop- 
ment of the police power, slow as it is, shows the 
adaptability of law to changing industrial and 
economic conditions. It has been said, and truly, 
that development of law lags behind the evolution 
of industrial society, so that the law represents a 
correspondence to a preceding stage or period in 
industrial development. It has been difficult for 
our courts to adjust themselves to the restrictions 
upon nominally free contract demanded by the 
interests of a larger and truer freedom. Conse- 
quently, in many cases decisions have been ren- 



dered which must be condemned by economic 
philosophy. Fortunately, however, our courts are 
finding the needed element of flexibility in our 
constitutional system in the police power, and are 
recognizing the fact that a new economic world 
demands new interpretations. Under American 
conditions, with upright judges of superior intelli- 
gence, devoted to freedom as they understand it, 
this proposition may be safely maintained, as has 
been well stated by one of our professors of law, 
"It has ever been true that in matters of great 
social and political import, our legal decisions and 
theories have conformed themselves to the current 
political and social thought, and not our social and 
political thought to our legal theories." ^ 

Among our various state courts I think the truths 
concerning freedom, which I have so imperfectly 
brought before you, have been most clearly seen 
and most explicitly stated by the Supreme Court 
of Massachusetts. Some years ago, legislation 
restricting the right of women to work in a factory 
more than ten hours a day and sixty hours a week 
was upheld. Significant extracts from the decision 
of the court in this case, are the following : " It 
does not forbid any person, firm, or corporation 
from employing as many persons or as much labor 
as such person, firm, or corporation may desire ; nor 
does it forbid any person to work as many hours a 
day or week as he chooses ; it merely provides that 

^ Professor A. A. Bruce, University of Wisconsin, in the Record- 
Herald, Chicago, July 7, 1901. 



in any employment which the legislature has evi- 
dently deemed to some extent dangerous to health, 
no person shall be engaged in labor more then ten 
hours a day and sixty hours a week. There can 
be no doubt that such legislation may be main- 
tained, either as a health or police regulation, if 
it were necessary to resort to either of those 
sources for power. This principle has been so 
frequently recognized in this commonwealth that 
reference to the decisions is unnecessary. 

" It is also said that the law violates the right of 
Mary Shirley to labor in accordance with her own 
judgment as to the number of hours she may work. 
The obvious and conclusive reply to this is, that 
the law does not limit her right to labor as many 
hours per day or per week as she may desire. It 
merely prohibits her being employed continuously 
in the same service more than a certain number of 
hours per day or week." ^ 

But we may go still further in defence of laws 
of the kind under consideration. When they are 
wisely conceived and well administered, instead of 
limiting "the right to labor," they increase the 
power of labor and make potential right an actual 
right. Presumably Mary Shirley's health and 
strength are conserved by the law which prevents 
her from working in a factory more than ten hours 
a day, and if so, her total power of working is aug- 
mented. There can be no question that our labor 

1 In Commonwealth v, Hamilton Manufacturing Company, 120 
Mass. 385. 



laws, especially those restricting child labor and 
regulating the conditions of toil of men, have in- 
creased the total labor power of millions of human 
beings. We must have regard to the entire life, 
and not a short space in the life. 

Mr. Justice Holmes, until recently chief justice 
of that state, has also expressed himself in such 
a manner, concerning the right of the state to 
regulate free contract in the interests of a larger 
freedom, as to show a clear insight into the under- 
lying principles involved.^ 

It is natural to expect enlightened decisions on 
economic questions in Massachusetts, and that for 
several reasons. One is the progressive character 
of the state, due to general enlightenment ; another 
is the altruistic spirit of the age, which finds such 
gratifying expression in the Old Bay State, and a 
third is the fact of its high industrial development, 
as a result of which it has had to deal for a longer 
period than other states with those questions grow- 
ing out of an intensive industrial life. Recently, 
however, two states, viz., Tennessee and West 
Virginia, industrially far less developed, have taken 
a leading position in the regulation of contract in 
the interests of liberty truly conceived. I refer to 
the decisions of the courts of these states, sustain- 

^ I am pleased to quote from a letter received from Mr. Justice 
Holmes, with his permission, the following: "In my opinion, 
economists and sociologists are the people to whom we ought to 
turn more than we do for instruction in the grounds and founda* 
tions of all rational decisions.'* 



ing statutes prohibiting the maintenance of truck 
shops, and also providing for weighing of coal. The 
courts clearly recognize inequalities in bargaining 
power, lying back of contract, and they also take 
the position, — and it is undoubtedly a true one, — 
that wise legislation of this sort is calculated to 
prevent industrial strife, disorder, and bloodshed, 
and to maintain the public peace.^ 

The august tribunal which holds its sessions in 
this city, the Supreme Court of the United States, 
has also, on broad grounds of public policy, upheld 
the statute of the state of Utah, which limits the 
working day for miners in that state to eight 
hours.2 The Supreme Court did not go into the 
wisdom of this particular statute, and I have no 
desire to do so on this occasion. It is simply the 
broad principle of regulation of economic relations 
in the interests of freedom which is in question.^ 

1 Harrison v. Knoxville Iron Co., 53 S.W. Rep. 955 (Tenn.); 
Peel Splint Coal Co. v. State, 15 S.E. Rep. (W.Va.) looo. 

2 Holden v. Hardy, 169 U.S. 397. 

8 A recent decision of the United States Supreme Court has 
interest in this connection, as it recognizes emphatically the fact 
that private property has its social as well as its individual side. 
The legislature of Massachusetts passed a law limiting the height 
of buildings on Copley Square, Boston, to ninety feet. The bill 
providing this limitation became a law while a building called the 
Westminster Chambers, far exceeding this height, was in process 
of construction. The proprietor of the building contested the con- 
stitutionality of the law, and the case was taken to the Supreme 
Court of the United States, which sustained its constitutionality, 
and, as The Nation says, "The intruding giant must now abate 
many feet of his inordinate stature." While, as The Nation says, 
the ostensible purpose is to prevent light being cut off from the 



We see the most enlightened courts thus endeavor- 
ing to develop the idea of public policy in such a 
way as to bring contract into conformity with in- 
dustrial conditions. 

It is in the police power that we find the pecu- 
liarly flexible element in our legal system, and with 
written constitutions such as we have it is not easy 
to see where otherwise it is to be sought. The 
possibilities of development along the line of the 
police power cannot be limited. Consequently, 
there is the possibility of an evolution of our law 
which shall adapt it to our present and future 
industrial life, and thus secure industrial liberty. 
Let us take, for example, the doctrine that free 
contract presupposes " the will as voluntarily mani- 
fested." It is quite evident that this must take 
from certain agreements the character of a valid 
contract. An agreement made by pressure due to 
threats to a man's house cannot be a binding con- 
tract. Similarly if I see a millionnaire who is 
drowning, and offer to save his life on condition 
that he turn over to me all his property, no court 
would sustain this agreement as a binding contract. 

Museum of Fine Arts, it ** appears greatly to extend the powers of 
the states to protect either natural or urban sites of exceptional 
beauty.*' It recognizes the right to pass special building laws for a 
part of the city, and limits still further the power of the landowner, 
— and this in the ultimate interest of all, landowners generally in- 
cluded. '' It may still be true that every landowner may excavate 
on his plat until he reaches the centre of the earth, but it is certain 
that he may build toward the heavens only so far as the general 
convenience allows." — TAe Nation^ March 5, 1903, p. 183. 

2E 4'7 


But is it not possible in some cases to take 
into account the pressure of economic needs, for 
example, the hunger of wife and children ? Un- 
questionably, agreements with wage-earners have 
been extorted by the severest pressure of hunger. 
Agreements for usurious rates of interest have also 
been extorted under the pressure of economic need. 
Courts have frequently found a way to declare such 
agreements of no binding force. I cannot enlarge 
upon this thought, and, indeed, have no desire to do 
more than merely to suggest an important line of 
evolution in the interest of liberty. 

Let us take, again, the principle that the right to 
contract must not nullify itself, and it seems that, 
from the standpoint of liberty, there can be no 
doubt whatever about this principle. Yet it is 
easy for contract to abrogate the right of contract. 
Whenever a man contracts himself into a condi- 
tion of virtual slavery, this is the case. I have 
already cited the well-known cases brought before 
Judge Bennett of South Carolina. Cases have 
arisen in Germany, under what is called the "com- 
petitive clause '* of labor contracts. It seems that 
there it is quite customary to insist upon a con- 
tract with an employee, learning a trade or occu- 
pation, that he shall not, after he has acquired his 
knowledge of the business, enter into competition 
with his employer. Sometimes there is a limita- 
tion upon the period or area within which no com- 
petition must be attempted, making the clause a 
fairly reasonable one. Sometimes, however, a lad 



utterly incompetent to contemplate the remote con- 
sequences of his act, and not having five dollars to 
his name, will agree under a penalty of perhaps 
several thousand dollars not to enter into competi- 
tion with his employer during his whole life, or in 
the entire German Empire, and sometimes, it is 
said, not anywhere in the world.^ When contracts 
are carefully scrutinized with respect to their im- 
pairment, directly or indirectly, of the right to make 
future contracts, it will be found that many regula- 
tions are necessary in the interests of liberty. 

Contracting-out, as it is now technically called, 
offers an interesting illustration of the absolute 
necessity of limitations upon contract in the in- 
terests of public policy. It will readily be con- 
ceded that private contract must not stand above 
public policy, and yet through contracting-out of 
obligations public policy may frequently, and will 
frequently, be subverted. Let us suppose it is 
determined to be public policy, as it has been 
determined in Germany and in England, that 
accidents to employees, unless brought about by 
wilful act of the employee, shall be regarded as a 
part of the expenses of manufacturing plants and 

^ It is interesting to read the following statement concerning 
industrial conditions in England during the sixteenth century, " In 
some trades the master required apprentices at the time of inden- 
ture to take an oath that they would not set up independent estab- 
lishments when they had fulfilled the years of apprenticeship, a 
custom which was forbidden by Parliament in 1536." The state- 
ment is taken from Cheyney's *• Industrial and Social History of 
England," pp. 147-14& 



agencies of transportation, to be paid for as any 
other costs of doing business, out of the proceeds 
of the business. Unless it is rendered impossible 
for an employee to contract-out of the obligation, 
this wise provision _ in the interests of a large in- 
dustrial liberty will be nullified by private con- 
tracts. Consequently, we find in the most advanced 
industrial countries the doctrine established by the 
statute, or coming to prevail in one way or another, 
that contracting-out of obligations, established in 
the interests of public policy, cannot be tolerated. 

Another line of development in the interests of 
industrial liberty must consist in opening up and 
increasing opportunities for the acquisition of a 
livelihood by the mass of men, in order that back of 
contracts there may lie a nearer approximation to 
equality of strength on the part of two contracting 
parties. It is certain that there will be a vast devel- 
opment along this line during the twentieth century, 
and through this development we shall find liberty 
expressing itself increasingly through contract. 

It is manifest, I think, that philosophical anarchy 
furnishes us with no ideal. The absence of all 
social regulations means the unrestricted tyranny 
of the strong. Plato clearly saw this when he 
asserted that "the most aggravated forms of 
tyranny and slavery arise out of the most extreme 
form of liberty." ^ 

Mazzini also saw this clearly enough, when he 
said of liberty, " If you enthrone it alone as means 

1 " Republic," VIII, 564, Jowett's translation, p. 272. 


and end, it will lead society first to anarchy, after- 
ward to the despotism which you fear.^ 

We have not said all, however, that there is to 
be said concerning the ideal of anarchy when we 
have pointed out that it can only mean tyranny 
and despotism. Liberty cannot be an absolute 
ideal, because authority is needed in society, in 
order to secure the harmonious cooperation of its 
various elements ; and without social authority we 
could have no production of wealth, and we should 
be without the material basis of that large and 
positive liberty which enables us to employ our 
faculties in the common service. This social 
authority rests, for the most part, upon the great 
institutions of society — property, vested interests, 
contract, and personal conditions. To only a 
limited extent is there a direct political basis for 
the authority whereby one man brings into harmo- 
nious cooperation other men, in the work of produc- 
tion. The basis of social authority is, for the most 
part, institutional. 

On the other hand, socialism furnishes us with 
no sufficient ideal of industrial liberty. Going to 
the opposite extreme from anarchy, it would find 
a political basis for that social authority through 
which the industrial cooperation of men is effected. 
It would limit the range of free choice, and restrict 
liberty, although to a less degree than anarchy. 
The true ideal lies midway between anarchy and 

1 Mazzini, " Rights and Wrongs," Publications of the Christian 
Social Union, pp. 9-10. 



socialism, and may be termed the principle of social 
solidarity. According to this principle, the great 
institutions of society must be conserved, but devel- 
oped in the interests of liberty positively conceived. 
There must be a carefully elaborated and wisely 
executed regulation of economic relations.^ 

We are indulging in no Utopian fancies, but are 
simply describing the forces which are everywhere 
manifesting themselves in the most enlightened 
nations, and are resulting in an evident increase of 
the sphere of industrial liberty for the masses of 
men. It absurd to say that we must not pass any 
law in the interests of a single class of men, inas- 
much as men exist in classes, and industrial laws, 
to be effective, must deal with them as they exist in 
classes.^ And, moreover, no class exists for itself. 
As society becomes real and vital, and means more 
and more to us all, it becomes apparent that no 
one class exists for itself, and that no one class 

1 This finds illustration in great detail in Professor Elwood 
Mead's book, " Irrigation Institutions." Irrigated agriculture re- 
quires the most minute public regulation of the supply of water to 
render property secure and to protect mutual rights, to prevent 
fraud and a tyrannical use of power, and to secure industrial liberty 
in any true sense. Irrigation compels men coming from the East to 
leave their individualism behind them, or suffer in consequence ; as 
a condition of general prosperity it forces men to enter into close 
economic relations with other men, and as a condition of liberty 
it requires a firm and wise public regulation of these relations. 

2 We are leaving behind us, in great industry, individual contract 
as the prevailing kind of contract. Even if the legal form is in- 
dividual contract, the reality is group contract. This is a necessary 
outcome of industrial evolution, as we have already seen. 



can exist apart from all other classes. While there 
is such a thing as vicious legislation in behalf 
of a few favored individuals, whatever promotes 
the interests of any one of the great and numerous 
Classes in society, either in matters physical, men- 
tal, moral, or spiritual, advances the interests of 
every other class. " We are members one of an- 
another," and " the eye cannot say unto the hand, 
I have no need of thee : nor again the head to the 
feet, I have no need of you; . . . and whether 
one member suffers, all the members suffer with 
it : or one member be honored, all the members 
rejoice with it." The apostle Paul gives in these 
words an expression to a deep principle of modern 
industrial society, the principle of social solidarity. 
I have sketched thus hastily a theory of indus- 
trial liberty. What I have said, I would have 
looked upon as thoughts on industrial liberty, 
more or less closely connected. I have not even 
attempted an exhaustive treatment, for which my 
time is too limited, even had I, as I have not, the 
wisdom for a complete presentation. I trust, how- 
ever, that what I have presented is in harmony 
with industrial evolution and truth. It is some- 
thing, at any rate, if I have at least made it clear 
that industrial liberty is a conception having a rela- 
tive and not an absolute value ; that it is to be con- 
ceived in a positive rather than in a negative sense; 
that it is not something which can be decreed 
offhand, by any legislative body, but rather that it 
is a social product, to be achieved by individuals 



working socially together, and that it comes, not 
all at once, but slowly as the result of a long- 
continued and arduous process. It is not the 
beginning of social evolution, but rather one of the 
goals of social evolution, and one which must be 
brought into harmony with other goals, such as 
equality, also relatively conceived, and fraternity, 
the only one of the three goals, liberty, equality, 
and fraternity, which can, in any way, be conceived 
absolutely. We have, then, among others, three 
goals of industrial evolution — liberty, equality, and 
fraternity — but the greatest of these is fraternity. 


An older view of industrial liberty is presented by John 
Stuart Mill in his classical work called " Liberty." This was 
first printed in 1859, and has been frequently reprinted since 

then, both in London and in New York. It is chiefly nega- 
tive in character, and is inconsistent with parts of his later 
writings. Mill always attached the greatest importance to 
a large sphere of individual action, but he came to see that 
positive action of society is necessary to secure this large 
sphere of individual liberty. His later views are presented 
briefly in his "Autobiography," published in London, 1873. 

Mill's views on liberty have been ably attacked, and in some 
respects successfully, by Sir James Fitzjames Stephens, in his 
work, "Liberty, Equality, and Fraternity," New York, 1873. 
Stephens examines the function of force in the evolution of so- 
ciety. The careful student of this subject should means 
fail to read this brilliant work, as well as MilPs eloquent plea. 

The most uncompromising adherents of liberty are the 

scientific anarchists, who oppose all exercise of force, and 

would even wipe out civil government itself. Benjamin R. 

Tucker is a prominent adherent of this view, and his work, 



called "Instead of a Book," New York, 1893, presents the 
anarchistic view of liberty. Mr. Tucker discussed trusts from 
the standpoint of anarchy in the Chicago Conference on Trusts 
of 1899. His address, entitled "The Attitude of Anarchism 
towards Industrial Combinations," will be found in the Pro- 
ceedings of that Conference, published by the Civic Federation 
of Chicago, 1900, pp. 253-261. 

The individualists led by Herbert Spencer stop only a step 
this side of anarchy, inasmuch as they advocate the existence 
of government, but the reduction of its functions to the lowest 
terms; negatively the prevention of violence through the 
maintenance of law and order, and positively the enforcement 
of contract. This view finds presentation in "A Plea for 
Liberty," London and New York, 1891. It consists of an 
introduction by Herbert Spencer and essays by various writers, 
and is edited by Thomas MacKay. Herbert Spencer's views 
also find vigorous expression in his reprinted articles entitled 
"Man versus the State," which form an appendix to the 
abridged and revised edition of his "Social Statics," New 
York, 1897. 

A view more in harmony with this present chapter is that 
presented by the late Thomas Hill Green, to which reference 
has already been made in this essay. Miscellaneous Works, 
Vol. Ill, "Liberal Legislation and Freedom of Contract," 
pp. 365-386. 

The most recent economic literature generally is based 
upon a recognition, either implicit or explicit, of the fact that 
a large measure of positive activity of government in the regu- 
lation of economic relations is necessary to secure true liberty. 
Professor Alfred Marshall's "Principles of Economics," 4th ed., 
London and New York, 1898, may be cited; also Bullock's 
" Introduction to the Study of Economics," new and revised 
ed.. New York, 1900. 

Finally, the whole discussion of socialism, pro and con, 
involves a discussion as to what really constitutes liberty, and 
how that sort of liberty which is admitted to be desirable is to 
be secured. 




I. The Process Outlined 

A QUOTATION from Sir Henry Maine will serve 
as a text for the present chapter. It reads as 
follows : — 

" What is the real origin of the feeling that it 
is not creditable to drive a hard bargain with a 
near relative or friend ? It can hardly be said that 
there is any rule of morality to forbid it. The 
feeling seems to me to bear the traces of the old 
notion that men united in natural groups do not 
deal with one another on principles of trade. . . . 
The general proposition which is the basis of 
political economy made its first approach to truth 
under the only circumstances which admitted of 
men meeting at arm's length, not as brothers of 
the same group, but as strangers. ... If the 
notion of getting the best price for movable prop- 
erty has only crept to reception by insensible steps, 
it is all but certain that the idea of taking the 

1 This subject is presented in popular form in the author's 
" Social Law of Service," and the first part of this chapter entitled 
"The Process Outlined" is little more than a reprint of a portion 
of that chapter. 



highest obtainable rent for land is relatively of 
very modern origin. The rent of land corresponds 
to the price of goods, but doubtless was infinitely 
slower in conforming to economical law, since the 
impression of a brotherhood in the ownership of 
land still survived, when goods had long since 
become the subject of individual property." ^ 

The ancient village community was an associa- 
tion of men bound together by peculiarly close ties. 
These men were generally supposed to be de- 
scended from a common ancestor and thus to be 
more or less closely related, and any outsiders 
received into the community became members of 
this large family. They felt themselves to be 
brothers, and in an imperfect manner attempted 
to establish brotherly relations among themselves. 
Competition was greatly restrained, — in fact in 
the modern sense could hardly be said to exist, — 
custom regulated prices, and sharp practice and 
hard bargaining were viewed with disapprobation 
and often severely punished. Ethical obligation 
extended to all the relations of life. The range 
of this obligation, however, was not extensive; 
once outside the community, moral law was scarcely 
recognized. There was often a place touching 
three or four village communities, but not belong- 
ing to any one, which was neutral territory. This 
became a market where the customs and usages 
of the village community no longer held sway, and 
it was in this market that the idea of the legitimacy 

1 "Village Communities," pp. 195-198. 


of hard bargaining and sharp practice took its 
origin, as we are told by Sir Henry Maine. This 
authority regards sharp practice and hard bargain- 
ing as true economic practice, and inquires why 
it is that somehow or another men are still fre- 
quently inclined to view it with disapprobation. 
He finds the explanation in survivals of feelings 
which once obtained among closely connected 
groups of men. The highest rent obtainable for 
land is not always exacted in England, and it is 
said that there are places where such an exaction 
would ostracize the landowner. The explanation 
given is that manorial groups were substituted for 
village communities, and that they still survive, 
even if in imperfect form. 

As old groups of men broke up with modem 
progress, ethical ideas have seemed to become 
weaker, and there has been an attempt to take one 
great department of social life, namely, the eco- 
nomic, entirely outside the range of ethical obliga- 
tion. Ancient groups were associations of brothers, 
but those not within the groups were enemies. The 
three words, "foreigner," " stranger," and " enemy," 
were similar, and often the same word denoted all 
three relationships — that of foreigner, that of 
stranger, that of enemy. When men's dealings 
were chiefly with those not connected by any 
recognized tie of mutual obligation, each one 
naturally tried to do the best he could for himself, 
regardless of consequences to others. Yet there 
never has been a time when there have not been 



those associations of one sort or another within 
which ordinarily good men have viewed with dis- 
approbation hard bargaining. It may be said, 
indeed, that a genuine feeling of brotherhood is 
incompatible with sharp practice and hard bar- 
gaining, and Sir Henry Maine is altogether on the 
wrong track when he looks for a time when what 
he styles economic practices shall universally ob- 
tain, and men shall applaud the person who drives 
a hard bargain or indulges in sharp practices with 
neighbors and friends. The breakdown of old ties 
which were intensive and not extensive led to a 
great weakening in the intensity of ethical feel- 
ing, especially in business life, because the same 
amount of feeling was, if we may use such an ex- 
pression, made to cover a so much larger territory. 
Men, however, have long been taught in all civil- 
ized nations that all men are brothers, and most 
enlightened persons profess to accept this teaching 
of universal brotherhood. There has been, then, 
an extension of brotherhood which is simply 
immense, placing us in the modern world indefi- 
nitely in advance of the closely related but exclusive 
groups of the ancient world. The range of ethical 
obligation has been widened until it embraces all 
humanity, but it has not been deepened in propor- 
tion. The work of deepening this feeling, how- 
ever, goes on uninterruptedly. 

Day by day the phrase, "All men are brothers," 
comes to mean more and more, and the time is 
surely coming when it will ethically mean as much 



in the world at large as once it did in the village 
community ; and when that time comes no decent 
man will any longer advocate the legitimacy of the 
universal sway of sharp practice and hard bargain- 
ing. Men will then try to put all business rela- 
tions upon a brotherly basis, and will always inquire 
what forms of industrial organization and what 
modes of doing business are in accordance with the 
highest standards of right, and best promote the 
general welfare. It is this deepening process of 
ethical obligation which explains many social prob- 
lems of our day. The deepening is going on with 
remarkable rapidity, and the result is that men 
everywhere bring ethical tests to bear upon all 
relations of life, and are rejecting as unsound all 
practices and customs inconsistent with genuine 
brotherhood. Mere conventional phrases no longer 
satisfy us; we want the reality of brotherhood. 
Now a business world, which has taken its origin 
in the middle ground lying between communities 
within which the range of ethical obligation was 
confined, can never satisfy a highly developed ethi- 
cal consciousness unless it has in the processes of 
growth gotten far away from its earlier character- 
istics. Men may talk and argue as they will about 
economic law, yet there is deep down in our hearts 
a feeling that there is something better than sharp 
practice and hard bargaining. 

It was an unbelieving age of materialism which 
asserted the all-sufficiency, and even beneficence, 
of self-interest, and attempted to restrict economic 


inquiries to this one question, " How produce the 
greatest amount of wealth ? " Aristotle, Plato, and 
the greatest of the ancients never asked, " How 
can our nation become as rich as possible ? ** but 
rather, " How may such economic and social rela- 
tions be established among citizens as to render 
them good and happy?" They sought in the 
business world merely a basis for the highest 
physical, mental, and spiritual development of man ; 
but they never looked upon the accumulation of 
riches as an end in itself. These ancients did not 
extend the range of ethical obligation beyond 
nationality ; but our age regards all men just as 
closely connected as the Jews in the eyes of Moses 
or the Greeks in the mind of Plato. Consequently, 
we begin to ask similar questions. 

* The widening and deepening range of ethical 
obligation rests upon a basis of solid facts. One 
of the most characteristic features of the latter half 
of the nineteenth century is the extension of inter- 
national connections. Men of all nations are draw- 
ing nearer and nearer together in every department 
of social life. After men ceased to regard the for- 
eigner as necessarily an enemy, they long con- 
tinued to consider him as an inferior. There are 
still Americans who regard Americans as superior 
to Englishmen or Germans or Frenchmen ; but as 
knowledge extends, and practical Christianity ad- 
vances, we feel that God has created all men of 
one blood. This is seen in international marriages, 
which have their good side, and that one of no 



mean significance. The number daily increases of 
those who have ties of blood relationship extending 
to several countries. People of culture and means 
have friends in three or four countries, and dear 
friends with whom connection is kept up by corre- 
spondence and occasional interchange of visits. 

The freedom with which capital moves from 
country to country has become a matter of com- 
mon knowledge, and it is often said that capital 
knows no country, but is strictly cosmopolitan. 
This is, to be sure, an exaggeration, but it empha- 
sizes forcibly actual facts. The past generation 
has witnessed a most marvellous growth of a feel- 
ing of brotherhood among the wage-earners of 
modern industrial nations. Possibly, when the his- 
tory of the nineteenth century comes to be written 
several generations hence, this will be regarded as 
the most marvellous feature of the second half of 
the century. The ties which bind workingmen to 
workingmen all over the world are very real, and 
are felt wherever there is an intelligent wage-earn- 
ing class with a developed class consciousness. 
Papers devoted to the interests of labor published 
in every European country find their way to the 
United States, and our labor papers find their way 
to all European countries. Even Asia and Africa 
are coming into this world movement. Working- 
men of one nation contribute to those of others to 
assist them in their upward struggle, and refuse 
advantages procured at the expense of brothers 
whom they have never seen. We need not cite 



facts in detail when all know that contributions of 
Australian workingmen helped English working- 
men to a victory in one of the most momentous 
struggles with their employers; and when the fact 
has been frequently published that workingmen 
from the continent of Europe, who have been 
brought to England to take the place of strikers, 
have returned to their own countries as soon as they 
found out the true nature of their engagement; 
and when under such circumstances European 
workingmen have even crossed the ocean from 
America to Europe after they had come over here 
in the hope of finding better wages. 

The extension of the range of ethical obligation 
moves most readily along what may be called hor- 
izontal lines — that is to say, it is largely an exten- 
sion within social classes. The English merchant 
recognizes ties which bind him to the merchants 
in New York and Paris and Berlin. Manufac- 
turers and employers generally are more and more 
conscious of relations of brotherhood binding them 
together, and, as has been just stated, the working- 
men of all lands feel their oneness, and their great 
rallying cry has gone forth, " Workingmen of all 
lands, unite ! " Thus it often happens that there 
is a better understanding among members of any 
social class in different countries than among 
members of different social classes in the same 
country. It cannot, indeed, be denied that while 
social classes in different countries are drawing to- 
gether, there is in some places a growing hostility, 
aF 433 


separating class from class in the same coontiy ; 
yet there is also in many quarters evideoice of 
efforts to bring together into brotheiiy relations 
all social classes. The range of ethical obligadon 
is in this respect likewise deepening. We are 
more and more inclined' to put ourselves in the 
place of those who socially are differently situated 
from ourselves; and hence it is that so many young 
men and women of means ai^d culture are devoting 
themselv^ to social problems in the hope of amel- 
iorating the Condition of the less-favored |>orti<»is 
of humanity, and that in great centres of educa- 
tion, like Oxford, we find an admirable enthusiasm 
of humanity which, in its earnestness and intensity, 
has been compared with the crusades* 

II. A More Detailed Examination of Causes 
and Methods 

The fact of an extension and intensive growth 
of obh'gation has been described. The basis of 
this growth is the relations which are formed 
among men, and these relations are very generally 
economic in character. Every one of them has 
some economic content or bearing, and the highest 
known relationships among men are, in the main, 
economic in their origin, and reach their highest 
forms only by an evolutionary process of purifica- 
tion. The relation of husband and wife is a famil- 
iar illustration. There does not seem to be any 
one sole origin of this relationship, but very fre- 


quently wives certainly have been purchased, and 
have been economic* chattels in early times. As 
men form relationships and come to know each 
other through these relationships, there has devel- 
oped a consciousness of kind, to use this expres- 
sion which Professor Giddings has made so familiar 
to us all, and this consciousness of kind has in- 
creased with the process of social evolution. The 
consciousness of kind carries with it a sense of 
ethical obligation. Whatever may be the deeper 
underlying causes, we observe this fact. These 
deeper underlying causes are psychical in charac- 
ter. We learn to know self through other selves. 
There is a play between the ** I " and the "you." 
Both are a part of our thought and our feeling. 
As we come into contact with others through these 
relationships, we picture a situation in thought of 
which others form a part. This means, necessarily, 
a feeling of sympathy, and the sympathy means a 
recognition of mutual obligation, with growing ful- 
filment of the obligations made upon us. The 
passage from self -regarding action to actions which 
regard others, as well as self, is a grewth and a 

The expression, " consciousness of kind," is cor- 
rect in a very literal sense. Those who are outside 
the familiar group within which one really lives, 
whether this group be large or small, are looked 
upon as strange beings ; they are regarded as be- 
ings who are essentially different. As individuals 
grow they repeat in part the history of the race. 



Boys of one town do not have the consciousness of 
kind with respect to those of an adjacent town. 
There are few, indeed, who do not know this from 
their own experience. The writer passed his boy- 
hood in Fredonia, N.Y., about three miles from 
Dunkirk. The boys of Fredonia looked upon 
the boys of Dunkirk as beings essentially differ- 
ent, and toward whom it was proper to display 
hostility. Fredonia boys and Dunkirk boys would 
fight each other simply because they lived in towns 
three miles apart. The consciousness of kind was 
absent ; but as the boys of the towns grow up and 
enter into mutual relations of one sort or another, 
especially economic relations, they have a growing 
consciousness of kind, although there will always 
persist traces here and there of the old, early, and 
primitive feeling. 

All early history and all contemporaneous his- 
tory of primitive peoples afford abundant illus- 
trations. The history of Greece is especially 
instructive. Greece was made up of small com- 
munities ; but these, though frequently engaged in 
war with one another, still came into far closer 
relationship with one another than they ever did 
with those who lived outside of Greece and were 
called the barbaroi. In the time of Homer, in- 
deed, there had been such an advance in the 
recognition of relationships among all the Greeks 
that no Greek ever became the slave of another 
Greek. The slaves were aliens.^ 

1 Vide Keller's " Homeric Society," p. 277, 


The Greeks had relations with foreigners, espe- 
cially with the Phoenicians ; but these relationships 
in the main touched the externals of life, and did 
not lead to the establishment of ethical relations. 
The Phoenicians, as has elsewhere been stated, 
were pirates and robbers, as well as merchants, 
and would not hesitate to enslave foreigners where 
they had opportunity. The same is true with 
regard to the Greeks. Guest friendship formed 
an exception, for in this there was a real vital con- 
tact, and a real feeling of fraternity was developed. 
This guest friendship had also its economic side. 
" Apparently the origin of guest friendship,'* says 
Dr. Keller, "lay in the reachings forth of a 
developing people toward an advance and toward 
a further and larger acquaintance with the world 
of greater material wealth and luxury than their 
own ; that is, the hospitality and love of guests so 
characteristic of the Homeric Greeks were another 
product of the contact with the higher Eastern 
civilizations." ^ 

The ideal of the classical Greeks was the eco- 
nomic self-sufficiency of the household, and 
economic ties binding them together were com- 
paratively few. In their stage of economic devel- 
opment there could be no network of economic 
relationships binding all the Greeks together, such 
as we find in a modem nation. The ethical ties 
binding together the various city-states were com- 
paratively feeble, and appeared in evidence chiefly 
1 Loc, ciU, p. 303. 


in the contrast between Greek and barbaros, and 
even then the ties were feeble. Greek was brought 
into relationship with Greek through such eco- 
nomic ties as existed : through marriage, through 
commerce, through common language, common 
religious ideas, and generally a common culture.^ 

When we pass on to the Middle Ages and to the 
early modem period of history, we still find the 
local communities bound together by economic 
and social ties. The town is organized as a mer- 
chant gild, which is formed to promote the inter- 
ests of the town and to secure as high a degree of 
monopoly as possible with respect to other towns. 
Within the town there were the craft gilds, each 
craft gild seeking a monopoly for its members. 
The gilds were called fraternities; they practised 
mutual assistance and helpfulness, and exhibited 
at their best a high degree of fraternal friendship 
among themselves; but once outside the narrow 
organization, very limited ethical obligation was 
recognized. The conditions in the town are excel- 
lently described by Professor Gustav Schmoller in 
the following language : — 

" Each separate town felt itself to be a privileged 
community, gaining right after right by struggles 
kept up for hundreds of years, and forcing its way, 
by negotiation and purchase, into one political and 
economic position after another. The citizen-body 
looked upon itself as forming a whole, and a whole 

1 F?V/<f Keller's " Homeric Society," pp. 14, 15, 303, 308, 311, 
314, et passim, 



that was limited as narrowly as possible, and for- 
ever bound together. It received into itself only 
the man who was able to contribute, who satisfied 
definite conditions, proved a certain amount of 
property, took an oath, and furnished security that 
he would stay a certain number of years. It 
released from its association only the man who 
solemnly abjured his citizenship before the council, 
who swore that he would bear his share of re- 
sponsibility for the town's debts, and contribute 
to the taxes of the town for a number of years, 
and who handed over to the town ten per cent of 
his property. The omnipotence of the council 
ruled the economic life of the town, when in its 
prime, with scarcely any limit; it was supported 
in all its action by the most hard-hearted town 
selfishness, and the keenest town patriotism — 
whether it were to crush a competing neighbor of 
a competing suburb, to lay heavier fetters on the 
country around, to encourage local trade, or to 
stimulate local industries." ^ 

There were, however, various ties drawing 
together these communities. Religion was one, 
for the influence of the church was felt over all 
the more civilized portions of Europe. The great 
universities of the Middle Ages also drew together 
in a bond of fraternity men widely separated and 
belonging, indeed, to different nations. The next 

1 Vide " The Mercantile System and its Historical Significance," 
by Gustav SchmoUer, pp. 7-8, in Professor Ashley's "Economic 



great step, however, was taken in the formation of 
the modem nation. The towns lost their isolation 
with the development of industry, particularly 
when industry began to be conducted on a large 
scale. As industry ceased to be local and became 
national in character, in the eighteenth and nine- 
teenth centuries, there was an immense extension 
of ethical feeling through the great channel of 
commerce. This has already been pointed out. It 
has already been pointed out also that we have in 
process of development a world economy, and we 
have a corresponding extension of the range of 
ethical obligation. This range of ethical obliga- 
tion has become world-wide, although it is felt in 
high degree as yet only by those who form the 
61ite of humanity. We will not enter, just at 
present, further into this general geographical 
extension of the range of ethical obligation. 

During the nineteenth century, as we have already 
seen, the feeling of fraternity moved largely along 
horizontal lines, and manifested itself in a most 
significant way among the workers. This has also 
already been indicated. It requires considerable 
investigation, and it would take far more space 
than could in this place be given to the subject to 
show in detail the growth and the strength of the 
fraternal feeling among the wage-earners of the 
most civilized nations. Marked expressions of it 
can be found even earlier than has generally been 
supposed. There lies before the writer a collec- 
tion of Chartist songs, dated 1849, entitled "Dem- 



ocratic Hymns and Songs." Frequently these 
hymns and songs give expression to a feeling of 
international fraternity. Even the French are felt 
to be brothers. One of these hymns is entitled 
" The Brotherhood of Peoples " ; another one is 
called "Old Opinions." The following is an ex- 
tract from the latter: — 

" Once we thought it right to foster 
Local jealousies and pride ; 
Right to hate another nation 
Parted from us by a tide ; 
Right to go to war for glory, 
Or extension of domain : 
Right, through fear of foreign rivals. 
To refuse the needful grain ; 
Right to bar it out till Famine 
Drew the bolt with fingers wan. 
Old opinions, rags and tatters. 
Get you gone ! get you gone !"^ 

Still another one is entitled ** England and France," 
the first verse of which reads as follows : — 

" We make no boast of Waterloo ; 
Its name excites no pride in us ; 
We have no hatred of the French, 
No scorn of Yankee or of Russ. 
The GLORY that our fathers gained 
In bloody warfare years agone, 
And which they talk of o'er their cups, 
Gives us no joy to think upon." ^ 

As industry has grown, as the wage-earners 
have come to form a self-conscious class, there 

1 « Democratic Hymns and Songs," p. 62. ^ Ibid,^ p. 84. 


has grown up among them a wonderful feeling of 
economic solidarity which has found expression in 
international socialism, as well as in other ways. 
An economic development has taken place, pre- 
paring the way for the great rallying cry of Karl 
Marx, " Workingmen of all lands, unite ! " There 
has also arisen a demand for international protec- 
tion of the wage-earner, through international reg- 
ulation of the conditions of toil, and this has been 
supported by non-socialists as well as socialists. 

The growing fraternity among workingmen has 
given us what Miss Jane Addams calls the newer 
ideals of peace. The old ideals were more nega- 
tive in character, dwelling upon the cruelty and 
evils of war. The newer ideals are more positive 
and aggressive, more dynamic in character, and 
arise from the masses of the people themselves.^ 

The most difficult problem is to cross over hori- 
zontal lines and bind together by ethical ties the 
various classes in the community. Economic 
causes, however, are also at work to accomplish 
this end. We have an ethical product of the com- 
petitive process to which frequent allusion has 
been made. The picturing of the connection be- 
tween self and other selves in the thought-situation 
is one thing. Another thing is the growing organi- 
zation on both sides which compels mutual recog- 
nition of rights and mutual respect and esteem. 
It may be difficult to see this at present, but it is 

^ This will find further elaboration in Miss Addams*s book, enti- 
tled, " The Newer Ideals of Peace," to be published in this Library. 



bound to become clearer as time goes on. We 
have also a deepening range of ethical obligation 
in the extension of public industry and public regu- 
lation of private industry. The philosophers of 
the Middle Ages had much to say about fair price. 
The idea of ethical fairness was one which received 
a large amount of theoretical and also of practical 
attention. Early in the last century, uader the 
regime of unregulated competition and the belief 
in the self-sufficiency of unregulated competition, 
the idea of fairness almost disappeared from theo- 
retical economics. With the growth of monopoly 
and public enterprise, however, the legislatures 
and courts are forced to fix prices, or to pronounce 
opinions upon prices, and they are bound to do so 
in accordance with ideas of fairness. We, there- 
fore, hear more than at any time during the pre- 
ceding century about fair wages and other fair 
prices, although strangely enough this fact does 
not seem to have impressed itself upon the con- 
sciousness of scientific men. 

We also have the general movements for the 
establishment of higher ethical ideals in the stand- 
ards of business, even while engaged in competi- 
tion. These higher standards are forced up#n 
contestants and modify their ethical feeling and 
ethical judgment. Food adulteration is being 
watched successfully in other countries, and in 
this country both the federal government and the 
state governments are concerning themselves with 
this imethical economic production. This is in 



itself an advance, and it paves the way for further 

Germany has taken a remarkable step forward 
in the development of the legal idea of unfair com- 
petition, and Holland is preparing to follow her 

Modern countries generally allow civil action 
for certain illegal methods in competition; but 
Germany has taken a step in advance in fighting 
unfair competition, not only with the civil but with 
the criminal law. The German law went into 
effect July i, 1896, and is summarized as fol- 
lows by Mr. Brainard H. Warner, Jr., consul for 
Leipzig : — 

I. Fraudulent advertising, ue. false declarations con- 
cerning methods of production, make-up or prices of 
wares, source of supply, reason for selling, possession or 
ownership of trade-marks. In the above cases every 
business man or group of business men has the right to 
bring suit against the offending party, calling for the sup- 
pression of the above practices, also for damages. A 
fine not exceeding 1500 marks {$zSl) can be imposed; 
repetition of such an offence is punishable with imprison- 
ment not exceeding six months. 

f. Detraction of a competitor, i.e, spreading false 

1 This is one of the reforms promised in the Queen's speech 
at the opening of Parliament in Holland two years ago. Vide 
Wochenblatt der Frankfurter Zeitung, September 20, 1 90 1. The 
German technical term is Unlauterer Wettbewerb. A bill having 
this same end has been introduced in the Hungarian Parliament. 
Vide Jahrbiicher fur National-okonomie und Statistik^ 3te Folge, 
Bd. XXIII, (LXXVIII) Jan.-June, 1902, p. 194. 



reports concerning the trade of another, his person, the 
manager of his business, or his wares. Offences of this 
nature are punishable with a fine not exceeding 1500 
marks (i>3S7), or imprisonment not exceeding one year. 

3. Misusing another's name in such a way that an 
unfair advantage is gained. Offending parties must pay 
damages, and are compelled to discontinue such practices. 

4. Disclosing business secrets during time of employ- 
ment. A fine not exceeding 3000 marks (i>7i4), or im- 
prisonment not exceeding one year, can be imposed, 
and in addition judgment of damages sustained. Any 
competitor using information gained in this way, as well 
as any third person disclosing such information to him, 
is liable to a similar punishment. 

5. Deception as to the quality of goods. The Fed- 
eral Diet has been empowered to prescribe that certain 
articles are to be sold at retail only in certain quantities, 
lengths, according to certain numbers, etc., or with decla- 
rations as to number, weight, etc. The punishment for 
every infringement shall not exceed 150 marks (<»3S.7o)." ^ 

Mr. Warner gives the following statement con- 
cerning the effects of the law : — 

"As regards the effect of the law briefly described 
above, the Berlin Society of Business Men and Manufac- 
turers says that up to the present time it has been very 
beneficial. This effect is ascribed to the strictness with 
which the law is enforced. The knowledge that taking 
an unfeir advantage of a competitor is not merely a 
breach of good faith, but is also punishable by fine or 
imprisonment, acts as a deterrent." * 

1 Consular Reports, October, 1902. « IHd, 



One of the most difficult ethical tasks which 
society has, is to deepen the feeling of ethical obli- 
gation on the part of those who control private 
corporations in their relations to the general pub- 
lic. Many illustrations could be given of the ab- 
sence of any deep feeling of ethical obligation on 
the part of private corporations in their relations 
to the public at large. The readiness of railways 
to encroach on public property, where they have 
an opportunity to do so, affords a conspicuous 
illustration. Society has here acting against it 
two adverse forces. Managers of private corpora- 
tions do things for the corporations which they 
would not do for themselves, even in the relations 
existing between private persons and the corpora- 
tions. The general dulness of conscience, then, 
of those who act through private corporations, is 
one adverse force. The second adverse force is 
found in the dulness of conscience even of private 
individuals with respect to public property and 
public claims, which finds further illustration in 
the matter of taxes. Generally speaking, as is 
well known, the social conscience is of slower de- 
velopment than the individual conscience, and the 
individual is guilty of ethical acts aimed against 
the public at large which he would not commit 
against other individuals. The difficult task, then, 
is the cultivation of a social conscience on the part 
of those who, acting through private corporations 
with a feebly developed conscience, attack public 
rights and public property, with respect to which 


the conscience even of individuals is very inade- 
quately developed. The task which society has 
before it in this particular is, however, not a hope- 
less one. Banking affords an illustration of the 
great progress in the development of social con- 
science, even on the part of those who act through 
private corporations. The higher standard set in 
our laws, and the rigid enforcement of these laws, 
has brought the banking business up to a much 
higher level than that upon which it operated in 
the first half of the nineteenth century, in the days 
of the so-called " wild-cat banking." We have the 
danger in banking which confronts the man who 
acts fraudulently ; but we have not only the danger 
— we have to do with a higher development of the 
conscience of the individual even when he repre- 
sents a private corporation. 

In conclusion, it is not to be supposed that the 
economic cause is a sufficient explanation of this 
widening and deepening range of ethical obliga- 
tion. It is one cause and has accompanied other 
causes. Religion has also been a force which has 
acted upon economic development in most marked 
manner, and it is a gross error to speak as ex- 
tremists do of religion as simply a product of 
economic development. The economic cause has 
been a chief cause, and quite possibly we may say 
in past history a dominant cause. Professor Selig- 
man lays special stress upon economic causes as an 
explanation of history, and is an advocate of what 
is called the economic interpretation of history ; but 



he frankly recognizes that other causes than 
economic have been at work in social development, 
and this chapter may very profitably be closed with 
a quotation from the excellent work in which he 
treats this subject. He says: "The view of 
history which lays stress on these paramount con- 
siderations is what we call the economic interpre- 
tation of history. They are not the exclusive 
considerations, and in particular instances the ac- 
tion and reaction of social forces may give the 
decisive influence to non-economic factors. Tak- 
ing man, however, for what he has thus far been 
and still is, it is difficult to deny that the under- 
lying influence in its broadest aspect has very 
generally been of this economic character. The 
economic interpretation of history, in its proper 
formulation, does not exhaust the possibilities of 
life and progress ; it does not explain all the 
niceties of human development ; but it emphasizes 
the forces which have hitherto been so largely in- 
strumental in the rise and fall, in the prosperity and 
decadence, in the glory and failure, in the weal and 
woe, of nations and peoples. It is a relative, rather 
than an absolute, explanation. It is substantially 
true of the past ; it will tend to become less and 
less true of the future.''^ 

Drummond, Henry, The Ascent of Man. New York, 1894. 
This work presents the ethical ascent of man, biologically 

1 Vide " Economic Interpretation of History," by E. R. A. 
Seligman, pp. 157-158. 



considered, in a popular manner. This is a work which 
is ethically valuable, and which, in its general direction 
of thought, seems to be in accord with biological truth, 
even if in some details it may not be sound. 

J BERING, Rudolf von, Zweck im Recht. 2 vols. Leipzig, 
1 883-1 884. This is a remarkable work of a jurist in the 
realm of ethical philosophy. The attempt is to show that 
moral ideas and moral conduct are developed by society 
for the accomplishment of its purposes. The author 
reaches the conclusion that ethics is the " queen of the 
social sciences." While the author goes far outside his 
field of jurisprudence, the whole subject is approached 
from the viewpoint of jurisprudence, and the entire treat- 
ment bears evidence of the profound legal studies of its 
author. This is a work which should not be neglected 
by any student of ethics who is able to read German. 

Sutherland, Alexander, The Origin and Growth of the 
Moral Instinct. 2 vols. London and New York, 1898. 
This work is especially valuable because it shows the low 
ethical qualities of the inferior races and makes clear the 
immense ethical advance which the more progressive 
races have made during their existence. The unspeak- 
able cruelty of savage races in their treatment of those 
outside their own narrow circle met with no ethical dis- 
approbation whatever, and is in marked contrast to the 
conduct which is approved by modern nations. Even if 
there is much to be deplored, as there undoubtedly is, in 
the expansion of the great nations of the world, the his- 
torical and evolutionary view presented by Sutherland 
should at least give courage to those who are fighting for 
the right. The work is the result of eleven years' work, 
as the author tells us, and is based upon a wide range 
of investigation. The author regards his book as a con- 
tinuation of the work of Charles Darwin, as he has carried 
over into another department Darwin's principles and 

2G 449 



The aim of the present work, as stated by the 
author, is " to inquire to what extent the principles 
of the development of the individual mind apply 
also to the evolution of society." It is a continua- 
tion of Professor Baldwin's earlier work, " Mental 
Development in the Child and the Race,** and in 
part it consists of the successful essay written 
in competition for the gold medal of the Royal 
Academy of Denmark. The question set was 
this, "Is it possible to establish, for the indi- 
vidual isolated in society, rules of conduct drawn 
entirely from his personal nature; and if such 
rules are possible, what is their relation to the 
rules which would be reached from the considera- 
tion of society as a whole ? '* 

What we have in this work is a treatment of 
social psychology so profound, so original, and so 
striking in its results that it cannot fail to mark 
an epoch in the future both of sociological and of 
psychological thought. It should, however, in 

1 " Social and Ethical Interpretations," by James Mark Bald- 
win, M.A., Ph.D., Professor in Princeton University and Co-Editor 
of TAe Psychological Review, 8vo, pp. xiv, 574, cloth, j52.6o. 


justice to the author, be stated at once that the 
present discussion does not claim to be exhaustive. 
This remark is the more pertinent as there is so 
general a tendency to criticise an author for not 
doing something which he did not set out to do, 
but which the critic assumes by implication that he 
ought to have done. Professor Baldwin observes 
in his Introduction that there are several methods 
by which the relation between the principles of 
the development of the individual mind and the 
evolution of society might be investigated. The 
first he calls the anthropological or historical 
method, which seeks information in the history 
of society; the second is termed the sociological 
or statistical method, and this aims to secure 
results by analytical and inductive examinations 
of society; the third is the genetic method, sub- 
dividing itself into the psychological and biologi- 
cal. Professor Baldwin adopts the psychogenetic 
method, examining into the psychological develop- 
ment of the individual " for light upon the social 
elements and movements of his nature, whereby 
he is able to enter into social organization with 
his fellows." The child is examined in his mental 
development, and the social results reached are as 
rich as they must be astonishing to one who has 
hitherto failed to approach problems of society 
from this simple point of view. One is reminded 
of Columbus and his egg ; also the thought occurs 
that a little child is still leading us into the truth. 
It is expressly stated by the author that a complete 



scientific research should include all three methods, 
and he frequently shows the connection of other 
methods with the one he has developed, and upon 
which the emphasis is laid throughout the entire 

One is puzzled to know how to discuss a work 
of this character in the brief space allowed to its 
review. Naturally, the reviewer in a periodical 
which has its own particular field quite outside of 
psychology will not attempt an examination of its 
technical character. The general significance of 
the work is what the educated public, outside the 
field of the specialist, desires to have made clear. 
The present reviewer will indicate briefly those 
features of Professor Baldwin's new book which 
strike him as most noteworthy both in their scien- 
tific and in their immediately practical bearings. 

The work opens with a discussion of the growth 
of self which reveals the intimate relationship of 
the ego and the alter. The two cannot be sepa- 
rated in evolution. Without the one the other 
would be non-existent. The person as self is 
formed, comes into existence by a give-and-take 
process between the ego and the alter, and the ego 
and the alter are born together; both are social 
products. Fundamental is the thought of the person 
as self ; and gradually growing up together we have 
my self and your self, or other self, and other selves. 
The growth process is backward and forward be- 
tween two poles — my self, other self. I know my 
self through your self. I know your self through my 


self. "The development of the child's person- 
ality could not go on at all without the constant 
modification of his sense of himself by suggestions 
from others. So he himself, at every stage, is 
really in part some one else, even in his own 
thought of himself" (p. 24). 

It is possible at this time and place to indicate 
little more than results, throwing out at most a few 
suggestions here and there of methods whereby 
results are reached. The momentous character of 
this process, or, in the author's term, dialectic of 
personal growth, must be apparent on a moment's 
reflection. What a magnificent foundation it gives 
for that social solidarity which impresses itself upon 
the student of every one of the social sciences, and 
indeed every careful observer of society! And 
this social solidarity is expressed in the strongest 
and most unequivocal terms in many passages, but 
perhaps nowhere better than in this somewhat ex- 
tended quotation from Professor Baldwin's earlier 
work, " Mental Development " : — 

" We have to say, therefore, that the child is born to be 
a member of society, in the same sense precisely that he 
is born with eyes and ears to see and hear the movements 
and sounds of the world, and with touch to feel the things 
of space ; and, as I hope, to show later in detail, all views 
of the man as a total creature, a creation, must recognize 
him not as a single soul shut up in a single body to act, or 
to abstain from acting upon others similarly shut up in 
similar bodies ; but as a soul partly in his own body, 
partly in the bodies of others, to all intents and purposes, 



so intimate is this social bond — a service for which he 
pajTS in kind, since we see in his body, con^deied simply 
as a physical organism, preparation for the reception of 
the soul-life, the suggestions of mind and spirit, of those 
others. I do not see wherein the conimunity of the 
senses together, in a single life of nervous activity, diffeis 
very much in conception from this community of men, 
bound together by the native ties which lie at the basis 
of their most abstract and developed social organiza- 
tions." (" Mental Development," p. 153.) 

This suggests the false antithesis between egoism 
and altruism which has puzzled so many, and which, 
among other things, has led Mr. Benjamin Kidd to 
give us his strange doctrine of an antagonism be- 
tween individual and social interests suqh that social 
progress can have no rational sanction ta the indi- 
vidual, and has led him to discover in religion an 
ultra-rational sanction for social progress, the office 
of which is to hold the individual quiet while he is 
being slaughtered in the interests of the race ! It 
has already been shown that even biologically we 
have given with the struggle for life also the strug- 
gle for the life of others, and now we have a psycho- 
genetic proof of the fact that egoism and altruism 
are alike reasonable. But this suggests a question 
which it is as well to answer at once. How recon- 
cile the claims of the ego and the alter? How 
does the man, wise as well as good, avoid perpetual 
conflict ? We have an interesting movement from 
self to my self and other self, and then a return 
again to a union in a higher, ideal self. 



But equally interesting and equally significant is 
the doctrine of social heredity, so finely elaborated 
that it is difficult even in the contracted space of 
this review to avoid enthusiasm. This social hered- 
ity must be treated along with natural heredity to 
understand the forces at work in social evolution. 
It has been overlooked, and yet it is the peculiarly 
human factor in social evolution. Indeed, as our 
author says : " The influence of social heredity is, 
in a large sense, inversely as the amount and defi- 
niteness of natural heredity. By this is meant that 
the more a person or an animal is destined to learn 
in his lifetime, the less fully equipped with instincts 
and special organic adaptations must he be at birth " 
(p.6i). We have a selective process among thoughts 
and ideas, in fact, very literally a struggle. The 
child learns " by imitative absorption of the actions, 
thoughts, expressions, of other persons " (p. 58), and 
the general fact that in much of his personal growth 
the child is indebted to society is called " social he- 
redity.** " In social organization the fruitful vari- 
ation is not the individual as such, but his thoughts " 
(p. 521). In the struggle of ideas those survive 
which have a fitness "for imitative reproduction 
and application,** and these are handed down by 
social heredity. 

This at once brings us to social progress. This 
is due in the first instance to individuals who work 
on the basis of what that society has given them in 
which they have become what they are. The indi- 
vidual is the particularizing social force, and society 



is the generalizing social force. The new variations 
are produced by the individuals, and this produc- 
tion is called particularization. It is this particular- 
izing by the individual which f umbhes the material 
of social progress. The thoughts, ideas, etc., of the 
individual furnish copy for imitation or gaieraliza- 
tion by society. It is as sodety takes up new 
material furnished by the social person tiiat it pro- 
gresses. We have here a very different force from 
any known to biology. And how much more pow- 
erful is the force of thought in society than phydcal 
heredity! As Professor Baldwin finely says of 
social truth, ''It leaps the bounds of physical 

Ideas come from the most capable, the most tal- 
ented, and nature herself thus provides every sod- 
ety, however organized politically, with a natural 

But there is an antinomy at last ! It is found 
in the failure of society to generalize the ethical 
thought of the individual. " In the ethical realm 
the individual may rule himself by rules which are 
in advance of those which society prescribes, and 
also exact them." 

The most impressive feature of Professor Bald- 
win's work to one thinking of it as a whole is the 
new emphasis laid upon social forces. The phi- 
losophy of the eighteenth century viewed external 
nature as the principal thing to be considered in 
^ study of society, and not society itself. The 
great force in society was extraneous to society. 



But according to the philosophy of our times, as 
it finds expression in Professor Baldwin's work, 
the chief forces working in society are truly social 
forces, that is to say, they are immanent in society 
itself. The importance of this change can scarcely 
be overestimated. Man as man comes into being 
and unfolds his powers through society. Ethical 
sentiment grows up in society ; " morality is in its 
origin and direct bearing a social thing" (p. 83). 
The moral, sense is essentially a social thing. The 
religious Bond is a social relationship, and God 
Himself "cannot be thought of out of this rela- 
tionship'* (pp. 345-346). 

A certain confirmation of Professor Baldwin's 
ideas concerning morality and the moral sense as 
social things may be found in the absence of moral 
ideas in the deaf and dumb before they have been 
taught to communicate with others. Experts tell 
us that the most elementary moral notions seem 
to be entirely absent, and of course a trace of the 
idea of God cannot be found. 

It is interesting to observe that very similar re- 
sults to those reached by Professor Baldwin have 
been gained by an entirely different process by one 
of the most celebrated jurists of the century, namely, 
the late Professor Rudolf von Jhering, of Gottin- 
gen, in his "Zweck im Recht." Approaching the 
subject of society from the point of view of juris- 
prudence, he finds the source and the sanction and 
the purpose of moral actions in society, and comes 
to regard ethics as the queen of the social sciences. 



It is significant that psychology and jurisprudence 
should lead to such similar, and to many, doubtless, 
such startling results. 

This work of Professor Baldwin's will prove a 
powerful assistance in the emancipation of sociology 
from an undue dependence upon biology, which 
helped to promote that crude materialism which 
has tinctured so much of our sociological thought 
during the past generation. Instead of biological 
sociology, we have social psychology. , We may 
in this connection quote the closing paragraph of 
" Social and Ethical Interpretations *' : — 

" Finally, our outcome may be gathered up in a sen- 
tence of characterization of society as a whole. Society, 
we may say, is the form of natural organization which 
ethical personalities come into in their growth. So also, 
on the side of the individual, we may define ethical per- 
sonality as the form of natural development which indi- 
viduals grow into who live in social relationships. The 
true analogy, then, is not that which likens society to a 
physiological organism, but rather that which likens it to 
a psychological organization. And the sort of psycho- 
logical organization to which it is analogous is that which 
is found in the individual in ideal thinking ^^ (p. 544). 

Unfortunately, Professor Baldwin's style is an 
extremely difficult one, and it is much to be feared 
that it will discourage many readers who might 
derive large benefit from his work. And the style 
is not only difficult, but in places positively bad. 
An admirer of the work cannot fail to regret cer- 


tain glaring faults which could have been easily 
corrected. The word "just," for example, is re- 
peated until it becomes positively painful for one 
to whom literary style is at all a matter of feeling. 
Many sentences also contain awkward repetition 
of the same word, once or twice indeed with a 
different meaning attached to it. What, for ex- 
ample, can we say of a sentence beginning, " There 
is a sense, it is true, in which the ethical sense " ? 
(p. 42). But there is no use in giving the list of 
awkward expressions which lies before the reviewer. 
Protest must be made also against a quite needless 
use of foreign words. Professor Baldwin has 
given us an example of German thoroughness — 
why not say thoroughness as well as Griindlich- 
keit.^ — and this is far better than perfection of 
style with superficiality. The best traditions of 
writers who use the English language, however, 
combine style with thoroughness, and we must 
take care that we do not fall into that neglect of 
literary form against which a reaction, even among 
German scholars, is noticeable. 

Professor Baldwin's work is one which no 
student of society can afford to neglect. It is 
one which will prove helpful to the teacher, and 
must profoundly influence the preacher who grasps 
its import. It gives us a social philosophy which 
makes possible a rational and helpful discussion 
of the problems of the day. Professor Baldwin has 
already accomplished great things, and from him 
still greater things may be expected in the future. 



As this chapter is a review of Professor J. Mark 
Baldwin's work bearing the same title, a bibliog- 
graphy scarcely seems to be needed. It may be 
mentioned, however, that in a little work called 
"The Story of the Mind," New York, 1898, Pro- 
fessor Baldwin has attempted to present his views 
in a popular form. 




I. Socialism and Social Reform Contrasted 

When we approach with serious purpose the 
social problems of our day, there is one question 
which must, first of all, confront us, provided we 
have the power of thinking clearly and logically 
and are fairly well informed concerning the move- 
ments of our own time. The question is this. Is 
our social order essentially sound, has it vitality 
and capacity for improvement, or is it essentially 
unsound so that it must give way to a new social 
order ? If there is to be a new social order, there 
is every indication that it will be socialism: By this 
it is meant that the only plan of a society, having 
large and widespread support on the part of think- 
ers of capacity, which it is proposed to substitute for 
existing society, is socialism. The alternative which 
confronts us is, then, socialism or social reform. 
It is important that we should make up our minds 
concerning this alternative, because, as we adopt 
the one belief or the other, our line of conduct 
will be very largely shaped. This antagonism be- 
tween socialism and social reform is well brought 



out in the following quotation from an editorial 
in Boyces Weekly for March 4, 1903. It is written 
by Mr. A. M. Simons, one of the ablest American 
socialists : — 

" Among those who seek to patch up and tinker 
our present society few phrases are more frequently 
used than that of ' special privilege/ This phrase 
is used to show that the abuses of our present 
society are specific, not generic, superficial, not in- 
herent. It implies that if certain definite excres- 
cences were peeled off, a smooth and beautiful social 
organization would be revealed beneath. With a 
little sticking plaster here and there, and a few 
patches judiciously applied, or, at the most, a few 
minor amputations performed, the social organism 
would be restored to health. 

" With such people monopoly and extortion are 
always due to some special privilege, some peculiar 
advantage, some abnormal situation. The owner- 
ship of land and franchises is particularly regarded 
as a 'special privilege.* Because the number or 
extent of these things is limited, therefore, they 
say, ownership confers a monopoly. This limi- 
tation, it is claimed, is peculiar to these few things 
and does not extend to the general mass of indus- 
trial capital. 

" Here is where the socialist parts company with 
them. He claims that instead of there being several 
different special privileges for a few individuals, 
there is one great * special privilege ' for a whole 
social class. There is only just so much land 


needed, say the defenders of special privilege ; there 
are only just so many franchises to be granted, he 
continues ; when those have been taken there is no 
chance for any one else to compete. True enough, 
but is this a special or a general rule ? In each 
market to-day, whether that market be the neigh- 
borhood or the world, the firm which can produce 
the cheapest is the only one which can live, is, 
moreover, the only one which is needed. Another 
one in the field is a nuisance, a duplication of 
effort, a waste of human energy. The trusts are 
seeing to it that this waste is abolished. There- 
fore, when once private ownership has been obtained 
in this one industry, whether it be land, mine, rail- 
road, telegraph, iron mill, cotton factory, or grocery 
store, it constitutes a 'special privilege' for the 
owner against all the rest of the world. . . . 

"If a half-dozen great department stores or 
finally one will supply the city of Chicago and fill 
the demand in the retail trade at a less cost of 
human labor than a thousand, then, when once the 
private ownership of these few stores is determined, 
that ownership becomes as much a special privilege 
as does the ownership of the street cars or telegraph. 

" In both cases the worker has exactly the same 
theoretical right and is prevented by the same 
practical impossibility of ever owning the thing 
with which he works. Nor is it any answer to say 
that the laborer could still work with simple tools 
if these special privileges were removed. The 
laborer created the complex, improved, and more 



productive tool. Production with anything but 
these is a criminal waste of human energy. To 
sentence men to use the more imperfect tools in 
order that a class of parasites may draw a revenue 
from the ownership of the more perfect means of 
production is simply to drive the laborers from the 
higher civilization their toil created to a lower and 
more painful social stage in order that the luxury 
of a ruling class may not be disturbed. 

'^ So long as the tools of production are so complex 
that it takes thousands of men to use them, private 
ownership of those tools gives a ' special privilege ' 
to the owners as opposed to those who must use 
them and cannot own them. 

"This is the ' special privilege' at which the 
socialist is striking. He sees it can be abolished 
only by making the ownership correspond with 
the use, that is, by making the ownership of the 
collectively used tools also collective.*' 

It is the present writer's belief, on the contrary, 
that our existing society has great vitality, that it is 
sound in its most essential elements, that a widely 
diffused ownership of wealth is practicable, and 
that the work which is required is improvement 
along existing lines. What is proposed in the 
present chapter is to show, so far as may be in brief 
outline the needlessness of socialism, on account of 
the strength, actual, latent, and potential, of the 
existing socio-economic order ; and when we have 
said the needlessness of socialism, we have said 
also the hopelessness of socialism, inasmuch as to 


an ever increasing extent society in its evolution 
is purposeful ; or to express it in other words, is 
governed by self-conscious social action. We are 
shaping society in order to accomplish ends which 
we have in view, and we do not change funda- 
mental institutions which are even tolerably satis- 
factory. It is proposed also to point out the lines 
of improvement, so that it may be seen what di- 
rection intelligent effort for social reform must 
take. This chapter will then to some extent be a 
r6sum6 of suggestions for reform already made as 
well as a conclusion of this book. 

It may be appropriate first to speak about an 
inclination which one can discover, now and then, 
to preach to the cultured, to the well-to-do, and 
especially to the rich, a stronger kind of doctrine 
than one would like to preach to wage-earners, in 
order, if possible, to urge the power-holding classes 
in the community to use their resources for social 
amelioration. Sometimes, in fact, we read ad- 
dresses and articles which evidently aim to frighten 
the wealthy into a righteous course of action. In- 
deed, it may be said that in the addresses of Christ 
the power-holding classes were arraigned in scath- 
ing terms for the selfish use of their power. 
Ruskin used strong language, but his books evi- 
dently were, for the most part, designed to reach 
especially the educated and wealthier classes in 
the community. At times the writer has felt — 
and has perhaps given expression to the feeling — 
that it would be a good thing if all those in the 
2H 465 


classes which we designate as well-to-do and 
wealthy could have a thorough course in socialism, 
while, at the same time, measures should be de- 
vised whereby the classes in the community who 
are less well circumstanced could be taught that 
industry, the prudent use of resources, and fru- 
gality are essential conditions of individual and 
social well-being. Yet the more he thinks upon it, 
the more clearly does it seem to him that it is 
impracticable to separate out our teaching, and to 
label part of it for one portion of the community, 
and part of it for another portion. Perhaps those 
who listen to our papers may sometimes take them 
as medicine; but we cannot, nevertheless, deal 
them out as prescriptions, handing one to the 
wage-earner and saying, "This is your medi- 
cine ! '* and another to the capitalist, saying, 
" This is yours ! ** and another to the preacher, 
saying, " This will do you good ! *' and still an- 
other, perhaps, to the law-makers with th*e assur- 
ance that, " This will prove beneficial for you ! '* 
What is said in these days goes forth upon its 
mission in all directions. Our words are like 
thistle-down carrying seeds, which may lodge no 
one can tell where. And this is the case even if 
the words make up addresses and papers which 
are in themselves heavy ! 

One other thought occurs in this connection, 

and that is this : an exaggerated doctrine, holding 

forth hopes which can never be realized, enlists 

the generous-minded to take up a mistaken cause, 



and the result is seen, sometimes in disappoint- 
ment and wholly or partially wasted lives, and at 
other times in reaction and the abandonment of 
moderate measures which would be successful. 
In a little book, giving a sketch of the life of John 
Swinton, these words are found : "The way of the 
reformer is hard, very hard. The world knows 
little about it; for it is rarely that a reformer 
shows the scars of the conflict, the pain of hope 
deferred, the mighty waves of despair that wash 
over a great purpose.'* ^ 

The conclusion is one which is very obvious; 
namely, that it is important before all audiences to 
speak the exact truth, in words of soberness, and 
avoid arousing or stimulating in any way Utopian 

Without attempting to distinguish between vari- 
ous phases and kinds of socialism, the following is 
offered as a definition which states socialism in 
its essential elements : " Socialism is that contem- 
plated system of industrial society which proposes 
the abolition of private property in the great mate- 
rial instruments of production, and the substitution 
therefor of collective property ; and advocates the 
collective management of production, together with 
the distribution of social income by society, and 
private property in the larger proportion of this 
social income.*' ^ Socialism may include more than 
is stated in this definition, but hardly less. 

* " Career and G)nversation of John Swinton," p. 53. 

* Ely's ^* Socialism and Social Reform," p. 19. Socialists differ 



..ScientificaUy, a$ already stated, the alternative 
of socialism is our complex socioHeconomic. cnder, 
which is based, in the main, upon private prop- 
erjty in capita], tibat is to say, the iB^ruinents of 
production, together with competition hi industry. 
Aio^side of competition, however, we have ooim- 
bination$ aiming to reatmin competition, and we 
have the beginning of the social reg^tion of com- 
binations, which wiU undoubtedly be carried farther 
in the g^eral interest. Alongside of private pro- 
duction we have a limited amount of governmental 
production. Our various governments — national, 
state, and local — are clearly destined to extend 
their productive activities, particularly in the field 
of monopolies.. No one who has eyes to see what is 
going on throughout the regions of industrial dvil- 
ization can well doubt this fact. Then we have, 
too, a distribution, through governmental agency, 
of a large amount of the wealth produced. A 
considerable percentage of the population, even 
now, consists of those who hold public offices of 
one kind or another, and whose salaries are de- 

among themselves as to the way socialism is to be attained, and 
generally they say that it will be the outcome of great evolutionary 
social forces. It is especially as to the extent to which these forces 
are the result of conscious effort that differences appear. Some 
believe that the extent of purposeful social activity is found in guid- 
ance of social forces so as to expedite and make comparatively 
painless the great impending changes ; others lay more emphasis 
upon intelligent, well-directed activity, as a cause of social move- 
ment and transformation. Into all this it is not proposed to enter 
at present. 



termined by law, and then we have also the activi- 
ties of government in education and charities, which 
dispose of a very appreciable proportion of the 
wealth annually produced. Our social system, 
then, is a highly complex one, which has been in 
process of development for centuries. This sys- 
tem, with all its potentialities, is the scientific alter- 
native of socialism. 

The practical alternative of socialism, as also 
already intimated, is social reform and its possibili- 
ties. What is being done, and what can be done, 
to improve our existing socio-economic order.? 
This is the concise, practical question which con- 
fronts us. 

Our complex social order presents difficulties 
which are obvious enough, but to the student of 
the evolution of industrial society they seem small 
as compared with the difficulties which stand in 
the way of the inauguration of socialism, — cer- 
tainly in any time which is near enough so that we 
need concern ourselves particularly with it. As 
our present system is a highly elaborated one, and 
is a product of centuries of growth, so beneficial 
changes which have taken place have also been 
changes which have been gradually evolved. This 
is apparent enough when one turns aside from glit- 
tering generalities to concrete study of the history 
of society. Perhaps no more striking illustration 
could be offered than the efforts which have been 
made to emancipate our colored brothers. It seemed 
at one time possible, to us who live in the North, 


to free them by one bold stroke. Many thought 
that the problem of freedom was solved by the 
Civil War. A generation has passed since that 
war, and we are still working upon this problem. 
Turning aside, however, to smaller matters, we 
may take up a concrete, economic problem, like 
irrigation. When we examine the progress of irri- 
gation institutions in their details, we see how im- 
provement is accomplished step by step, by work 
which continues year in, year out. We see also 
how carefully each step must be guarded in order 
not to produce disastrous consequences, showing 
themselves in blighted fortunes and ruined lives. 
Perhaps this explains the conservatism of our 
judges, whose very callmg leads them to study in 
concrete details the problems of society. It may 
also offer an explanation of an excessive conserva- 
tism which one sometimes finds in the judges, who, 
inasmuch as they are almost entirely occupied with 
concrete details, often overlook the force of general 
principles, and their power gradually to compel 
details into conformity therewith. 

We have, then, given us our Scylla and our 
Charybdis. There are those who would timidly 
let things alone, feeling the difficulties in the way 
of improvement, and sometimes, on the part of the 
less generous-minded, selfishly dreading change. 
There are others who would rashly overthrow 
what we have already accomplished and begin a 
radical reconstruction of society. Both courses 
are alike dangerous. There are all the possi- 


bilities of reform which have been suggested, and 
there is the great progress which has abready been 
made. But emphasis is to be laid upon the fact 
that things are not accomplishing themselves. 
When we study at all carefully the history of 
the last century, we shall see that every step for- 
ward has been the result of an immense amount 
of hard work and self-sacrifice. It would seem, 
moreover, that our present society rests upon an 
increasingly secure basis in proportion as improve- 
ment takes place. If we let things alone, we shall 
have an evolution much like that which the great 
socialists, Marx and Engels, predicted, an evolu- 
tion going from bad to worse until we approach 
a great catastrophe. But the fact is, that there 
is no prospect of our letting things alone. We are 
trying, — we must increasingly try, — by intelligent 
and conscious effort, to guide the course of society. 
Can it be without significance that so many dan- 
gerous movements have come from despotically 
governed Russia, and that in Switzerland, which 
in many particulars leads the world in social 
reform, socialism should be a comparatively weak 
political force ? 

It has already been stated that the industrial 
question, which overshadows in importance all 
other questions, is this: Is industrial evolution 
naturally leading to the domination of substan- 
tially all the great fields of industry by monopoly } 
This is the position of the socialist, and if it is cor- 
rect, then the coming of socialism seems inevitable. 



A closely related subordinate question is this : Are 
there irresistible economic forces at work which 
are leading to the concentration of the ownership 
of wealth in a few hands ? We have already seen 
that these two questions are not, by any means, 
entirely the same, because the concentration of 
production does not always mean the concentration 
of the ownership of wealth. 

As to the first main question which has been 
stated, it does not seem that, when we examine 
carefully the economic forces at work and their 
outcome, so far as we are now able to perceive 
this outcome, we are by any means forced to 
accept the position of the socialist, — which, by 
the way, is also the position of some trust advo- 
cates, — that our present industrial evolution is 
bound to terminate in general monopoly. We are 
at first inclined to think so, perhaps, when we 
examine a few of the most striking phenomena 
of modern times, like the formation of the great 
steel trust; but a more careful study of the indus- 
trial field, of the forces at work therein, and of the 
possibilities of social control, is very likely to lead 
to a different conclusion. 

Let us very briefly examine the social forces 
which are at work, either concentrating or diffus- 
ing the ownership of wealth. If it is true that, 
necessarily, there is going forward a concentration 
of property, that the rich are necessarily becoming 
richer, that wealth is passing into fewer and fewer 
hands, this gives us a strong reason for believing 



that those are right who hold to the fact that 
every field of production must soon be controlled 
by monopoly. If, on the other hand, we find that 
the forces which make for diffusion are dominant, 
we may believe that it is quite possible for society 
to control the forces of production. 

Dr. Charles B. Spahr's treatise on "The Dis- 
tribution of Wealth in the United States" has 
already been examined in another connection in 
this work. In Chapters I and II he discusses in 
an instructive man.ner the forces which have been 
in operation in England and the United States to 
concentrate wealth. Possibly he may exaggerate 
the present situation, as his critics say that he does. 
One of the ablest of these critics is the late Pro- 
fessor Richmond Mayo-Smith. In examining Pro- 
fessor Mayo-Smith's criticism of Dr. Spahr in 
" Statistics and Economics," it is striking that, al- 
though he expresses himself in somewhat different 
language, and draws somewhat different conclu- 
sions, yet, after all, in the main his statements of 
facts do not show that there are necessarily 
substantial errors in Dr. Spahr's conclusions. 

Dr. Spahr describes the forces which, during the 
reign of George III (1760-1820), operated to con- 
centrate the wealth of Great Britain. He shows 
us that somewhat similar forces operated in this 
country during our Civil War (1861-1865) in the 
direction of concentration of wealth. He mentions 
particularly three great causes which were the be- 
ginning of vast fortunes and of the concentration 



of a very appreciable proportion of the wealth of 
the United States in a comparatively few hands. 
The three forces which he mentions are, first, 
monetary legislation; secondly, our methods of 
taxation and our financial legislation generally; 
and, thirdly, the methods of railway construction 
and railway financiering. While here and there 
the present writer would give a different inter- 
pretation of these forces, he agrees in the main 
with what Dr. Spahr says concerning them. Dr. 
Spahr discusses to some extent those forces which 
have operated in England and in the United 
States in the direction of the diffusion of wealth, 
but so far as this country is concerned, it seems 
safe to say that the forces which are in operation 
at the present time making for the diffusion of 
wealth are not so fully discussed as could be 

Beginning our discussion at the point where Dr. 
Spahr leaves off, five further main causes of con- 
centration of wealth may be mentioned. 

II. Forces operating in the Direction of Con- 
centration of Wealth 

I. The unearned increment of land, especially 
in cities. There is no doubt that this is a real 
force. Dr. Spahr, himself, however, has shown 
that it is easy to exaggerate the unearned incre- 
ment of land.i He has called attention to the fact 

1 In editorials which appeared from time to time in the Outlook ; 
especially in those discussing the " Single Tax " a few years ago. 



that landowners in this country very generally pay 
large sums for improvements, in special assess- 
ments, and that what seems to be unearned incre- 
ment is frequently offset by special assessments. 
In opening up new sections in cities, also, the land- 
owners frequently contribute large sums to intro- 
duce rapid transit and other improvements, and 
they in this way perform a real service. Further- 
more, it is easy to exaggerate the unearned incre- 
ment of land through a failure to extend our 
observations so that they cover the country as a 
whole. We must not think simply of New York 
City, London, or Berlin. We must consider the 
spreading out of cities through the improved 
means of transportation, frequently going so far 
as to bring about a fall in land values. The open- 
ing up of new sections of cities has in very many 
places in the United States proceeded more rap- 
idly than the growth of population, and there has 
been a decrement in land values. 

The claim has also been made that the trust 
movement operates to depreciate land values. 
Cincinnati has been instanced as a city in which 
this is particularly the case. The concentration 
of production and the weakening of competition 
lessen the need for office buildings, and make it 
less important that expensive offices should be 
maintained, located in conspicuous positions, with 
costly devices designed to solicit business and 
draw it away from competitors. Manifestly, we 
cannot go into this important topic exhaustively, 



but one who has travelled extensively in the 
United States, and has inquired into land values 
in cities, knows that the depreciation of land 
during the past twenty years has been very re- 
markable and very widespread. This applies par- 
ticularly to land in small cities. All those who 
live in the East know that agricultural land values 
have fallen very greatly in large sections of our 
country. On the other hand, when we travel in 
the West, we notice in many places an enormous 
increment in agricultural land values. On the 
whole, it seems that we must admit that the un- 
earned increment of land is a real force, although 
the present author believes that private property 
in land has advantages which greatly outweigh its 

2. The trust movement is operating in its ear- 
lier phases at least in the direction of concentration. 
The processes which accompany the formation of 
trusts have brought vast wealth into a few hands, 
and have, in the interests of the comparatively 
few, mortgaged future wealth production. These 
evils may in a measure be corrected, but so far as 
we can now see it is clear that the trust movement 
has up to the present been a force in the direction 
of concentration. 

3. In the third place, war, whenever it comes, 
carries with it forces which bring wealth to the 
few rather than the many. It is not practicable 
to enlarge upon the economic conditions of war in 
this place. A careful study of modern warfare 



will, however, amply substantiate the position that 
war almost invariably, perhaps invariably, enriches 
the few rather than the many. It creates a de- 
mand for capital rather than for labor, and it intro- 
duces a speculative element into business which is 
disastrous to the economically weak, and enriches 
the economically strong. If we follow out in detail 
the economic effects of our Spanish War, illustra- 
tions of this position will be found, although, on 
account of its brevity, it did not have very large 
effects as compared with our Civil War. A care- 
ful study of history will show that great inequal- 
ities among us were caused by that war, and that 
many gross inequalities which have arisen since 
can be traced back to causes set in operation 
during that war. 

4. Arrangements of one kind and another may 
be mentioned by means of various trust devices to 
secure the ends of primogeniture and entail. This 
applies especially to large wealth in great cities, 
where the number of so-called " trust estates " is 
very considerable. 

So far as it goes, this is a force which operates in 
the direction of concentration, and one which has 
alarmed even so conservative a man as Judge John 
F. Dillon of New York, as is clearly enough seen 
in his address on " Property," delivered a few years 
ago before the New York State Bar Association.^ 

1 " Property : its Rights and Duties in our Legal and Social Sys- 
tems," an address delivered before the New York State Bar Asso- 
ciation, January 15, 1895, ^V 1°^" ^* Dillon, LL.D. 



5. Another force operating to concentrate the 
ownership of wealth may be called economic in- 
ertia. According to the principle of inertia, forces 
continue to operate until they are checked by other 
forces coming into contact with them. Those who 
have great possessions find it easy to add to them by 
a process of accumulation which requires a minimum 
of sacrifice. On the other hand, there are great 
dangers in vast concentration of wealth, and one 
precise danger is that the children, being brought 
up in excessive ease and self-indulgence, will lack 
force. Where there is a wise discipline in the 
family, however, the advantages of great wealth in 
the further accumulation of wealth can be seen. 
A teacher in a university has an opportunity to 
test very frequently the correctness of what is said 
about economic inertia. Those who do best are, 
very generally speaking, not the children of the 
poorest, but the children of those who belong to 
what we should economically call the middle class, 
those who must make a struggle, but to whom the 
struggle is mitigated by accumulations of ancestors 
and parental care. On the other hand, wealth, 
where it is wisely used, and is not accompanied by 
a lessening of energy, is a very great advantage 
for the further accumulation of wealth to the indi- 
vidual who owns it. 

III. Forces which operate to diffuse Wealth 

Let us turn our attention now to forces which 
operate to diffuse wealth. 


1. Education, broadly considered, should be 
mentioned first of all. There is a pronounced 
desire on the part of the American people to fur- 
nish educational opportunities to all persons in 
proportion to their capacity to enjoy them. We 
have, in addition to our private foundations, the 
state universities crowning the public educational 
system of the states of the Union west of New 
York State. We have, in addition, a wonderful 
free library movement, resting in part upon private 
gifts, but in most cases supported very largely by 
public taxation. We have, furthermore, the spread 
of technical education in the United States. With- 
out entering into further details, it can safely be 
stated that education, as it is carried on in the 
United States, operates in a double manner in the 
direction of the diffusion of wealth : first, it requires 
large expenditure, which must be taken out of the 
current income of society ; and secondly, it is favor- 
able to talent wherever found. All this can be en- 
larged upon indefinitely. 

2. Next, mention must be made of the public 
control of corporations. Lack of such control has 
been responsible for a large degree of concentra- 
tion. This applies particularly to railways, but 
also to other corporations. Work in the direction 
of public control has made considerable progress 
in Massachusetts, but, taking the country as a 
whole, we have scarcely more than made a begin- 
ning. The movement in this direction is certain 
to be carried very much farther. 



3. Changes in taxation are the third item in 
this enumeration of forces. Taxation, as it has ex- 
isted in the United States, has been, on the whole, 
favorable to the few rather than to the many. The 
author cannot recall any one who, having examined 
our system of taxation in detail, does not admit 
that, on the whole, this is true. Changes, how- 
ever, are going forward in our tax systems through- 
out the United States, and wherever they have had 
an opportunity to do so, people at the polls have 
pronounced themselves very strongly in favor of a 
changed taxation. So conservative a man as the 
late President Benjamin Harrison expressed him- 
self very strongly against the injustice of the past, 
and in favor of changes in taxation which should 
be more favorable to the many. Whatever our 
views concerning the propriety of it, when we take 
a broad survey of the forces at work in the United 
States, we can scarcely deny that there is a pro- 
nounced movement in favor of taxation which will 
be relatively favorable to the many, and operate in 
the direction of diffusion of wealth. The taxation 
of property as it passes from one generation to 
another by means of inheritance — using the term 
inheritance in its broadest sense — is one of the 
most pronounced movements of our day, and has 
already been discussed. 

4. The development of the idea of property as 
a trust is next mentioned. This takes place chiefly 
through education of public opinion, but it is per- 
haps already affecting legislation and judicial de- 



cisions, and is likely to do so to a far greater 
extent in the future. This idea of property as a 
true and genuine trust, even in a legal sense, was 
brought out very clearly in the discussions con- 
cerning the coal strike during the summer and 
fall of 1902. 

Especial mention of industrial betterment may 
be made in this connection. Without making any 
close calculation, the writer presumes that he may 
have travelled something like thirty thousand miles 
in the United States since June i, 1901. He has 
examined the industrial conditions with some care, 
and he has been impressed by the conscientious 
efforts on the part of employers to improve the 
conditions of their employees, showing that there 
is a widespread feeling that the possession of 
industrial and economic power carries with it a 
commensurate responsibility to use that power 
generously. This statement does not imply ex- 
cessive optimism. In many cases much that is 
discouraging was found; the gravest kind of 
abuses still exist, but there was never before so 
general an effort to remove evils and to improve 
the conditions of wage-earners. Cleveland, Ohio, 
is a leader in this particular, and it is noteworthy 
that in that city the Chamber of Commerce has 
taken an active part in industrial betterment. 
The Chamber of Commerce has an "Industrial 
Committee,*' with a paid secretary, Mr. W. H. 
Moulton by name, and it is his particular duty 
to give assistance to employers in methods of 
21 481 


industrial betterment. It may also be added that 
the amount of his salary is contributed to the 
Chamber of Commerce by a Cleveland woman of 

5. Profit-sharing and cooperation. This means 
in one way or another a participation of labor in 
the profits of capital. Both profit-sharing and 
cooperation have quite narrow limits at the pres- 
ent time, but their extension, so far as practicable, 
is desirable. 

6. Sound currency is next mentioned. This, 
perhaps, can be considered, as a force bringing 
about diffusion of wealth, in the negative sense 
only. The absence of a sound currency is favor- 
able to a concentration of property ; a sound cur- 
rency system is the basis of the operation of other 
forces in favor of diffusion of wealth. It is per- 
haps significant that the Fabians, and generally 
the English socialists, recently have been in favor 
of what is called with us sound currency. There 
has been no movement in recent years on the part 
of socialists in Europe in favor of paper money, or 
other devices for expanding the currency and de- 
preciating the value of the money unit. Along in 
the '30's American labor felt that it was a great 
grievance that it was so often remunerated in 
paper money which was depreciated and uncer- 
tain in its value. The literature of the day shows 
that there was, to some extent at any rate, on the 
part of labor leaders at that time a feeling in re- 
gard to the poor bank money of that period, sim- 



ilar to that which labor leaders now have with 
respect to payment in orders on company stores. 

7. Public ownership of public utilities is a 
further force. As private ownership has been an 
avenue through which property has been concen- 
trated, so public ownership operates in favor of 
the diffusion of wealth. This can be clearly seen 
when we compare the post-office in the United 
States with the private postal system on the conti- 
nent of Europe, which lasted for centuries, and 
the last vestiges of which were wiped out only a 
generation ago. This European private postal 
system resulted in the immense concentration of 
wealth in the great family of Thurn and Taxis. 
On the other hand, we may compare the concen- 
tration of wealth in the United States, which has 
been the result of private ownership of railways, 
with the relative diffusion of wealth in those coun- 
tries in which railways have been publicly owned 
and publicly managed. We do not now enter into 
a discussion of the pros and cons of public owner- 
ship versus private ownership. A movement in 
favor of public ownership is observable, and, what- 
ever its advantages or disadvantages, it operates in 
the direction of wide diffusion of wealth. 

8. Labor organizations. Without entering into 
any controversy concerning labor organizations, 
we may say, that if the very able Report of the 
Industrial Commission brings out any one thing 
clearly, it is that labor organizations are a force 
making for diffusion of wealth. 



, 9. Institutions, especially in the interest of the 
wage-earning and economically weaker elements in 
the community. Labor bureaus may be men- 
tioned, also free employment bureaus ; also legal 
aid societies of one kind or another, which help 
the economically weaker elements in the commu- 
nity to secure their rights. 

10. Saving Institutions and Insurance. Build- 
ing societies may be mentioned. Insurance, so far 
as it goes, helps remove the contingencies in life 
which are the great evil for the economically weak, 
and also for the upward-struggling masses. 

These forces show, in the main, it may also be 
maintained, a changed attitude toward the state 
which is favorable to the weaker elements in soci- 
ety, and must tend to a greater or less extent to 
diffuse wealth. 

To an ever increasing extent, as so frequently 
stated, society is governed by the operation of self- 
conscious social forces. There is a dawning 
self-consciousness of society, and there is clear 
evidence of a determination on the part of society 
that the advantages of civilization shall be widely 
diffused, although there is no evidence of a wide- 
spread desire for equality of possessions. The 
power of society to accomplish its purposes is vast, 
and the enumeration under ten heads of forces 
making for the diffusion of wealth is striking 
evidence of the operation of the social conscience. 

Evidently there is need of action in harmony 
with the existing socio-economic order to bring 



about the highest measure of general prosperity 
and a wide diffusion of economic well-being. The 
work to be done is abundant, and there is no lack 
of opportunity for the strenuous life. 

IV. The Participation of the Best Elements in 
Society a Condition of a Sound Public Life 

One suggestion occurs in this connection. The 
work is not all public work, but a considerable 
portion of it is, and it is safe to say that a sound 
public life is an essential basis for a desirable evo- 
lution of industrial society. Is there not some 
evidence of an inclination to rule out from partici- 
pation in public life many of the best elements in 
society ? Some say our preachers must take no 
part in politics because they are concerned with 
spiritual affairs. It is said that our judges must 
not take part in political life because they must 
maintain an impartial attitude with respect to all 
classes in society. Then it is asserted by many that 
university professors must abstain from active par- 
ticipation in politics. If the professors are in state 
universities, it is feared that their activity may be 
prejudicial to the interests of the universities when 
matters of appropriation come forward ; and if the 
universities are private foundations, apprehensions 
are frequently expressed concerning the influence 
of political activity upon possible givers of funds. 
We also find business men who hesitate to speak 
out boldly upon public questions, fearing that they 



may prejudice the interests of their businesses; 
and occasionally great corporations forbid active 
participation on the part of their employees in pol- 
itics. The question may arise, Where then are we 
to find the men who are to make our public life 
what it should be ? The question is simply thrown 
out, with the suggestion which naturally goes with 
it. We need not maintain that preachers should 
present doubtful decisions concerning concrete 
measures in their pulpits. It is difficult to see 
how, with propriety, a preacher can in his pulpit 
advocate the single tax, or socialism. He may 
advocate social righteousness, however, and there 
is an abundance for him to do in this direction 
without the advocacy of doubtful measures. The 
evils of child labor, and what that implies from the 
point of view of an all-embracing Christian love, 
may be instanced. Should not the preacher, how- 
ever, outside the pulpit be at liberty to advocate 
whatever causes he pleases ? 

There is quite prevalent a point of view con- 
cerning academic teachers which would seem to be 
entirely erroneous. Some say the professor may 
advocate what he pleases in his classroom, but he 
may not enter freely into politics. Is not the 
precise reverse true.^ Is it not an impropriety 
when the professor makes himself, in the class- 
room, an advocate of specific measures of reform ? 
The professor in his classroom has no business to 
be a partisan. In his classroom it is his function 
to present scientific truths. It is science which 


occupies, or should occupy, him in the classroom. 
But outside the classroom should* he not be free to 
advocate specific reforms, to join a party and enter 
into public life ? The activity in. public life of the 
professors in Germany is one of the most whole- 
some influences in that country. 

We must vindicate true freedom for all. What 
we want is to associate all the best forces in the 
community to make this world of ours an increas- 
ingly good world — a better and better world for 
the children of men during their sojourn here, 
convinced that, whatever the future beyond this 
world has in store for us, we shall be best pre- 
pared for our further life by the faithful discharge 
of our duties to our fellows in this present world. 
The present duty of each one is to contribute his 
full part, in accordance with his strength, to in- 
dividual and social improvement. 


The subject of the present chapter is so wide a 
one that particular references seem scarcely called 
for. Economic literature in general discusses the 
subject. It is also discussed in connection with the 
treatment of particular problems. Professor Fer- 
nowls work, " Economics of Forestry " (New York, 
1902), deals with economic and social reform in the 
matter of forestry, while the significance of irri- 
gation in the arid regions is brought out by Pro- 
fessor Elwood Mead's "Irrigation Institutions" 
(New York, 1903). These are mentioned merely 



as illustrations. Another illustration is afforded by 
taxation and tax reform. The subject is discussed 
by Professor Henry C. Adams in his work, " The 
Science of Finance " (New York, 1898). It is 
obviously not desirable to go through all the special 
treatises dealing with the possibilities of social 
improvement in the various directions which man's 
associated activity takes. Works which discuss 
socialism very generally discuss the subject of 
social reform, the advocates of socialism taking the 
position that social reform to be effective must 
mean socialism, while the opponents of socialism 
believe that social reform is compatible with the 
maintenance of the present social order. This is 
a view which the author presents somewhat more 
fully, and also somewhat differently, in his work, 
"Socialism and Social Reform," than in the present 
chapter. Such works as Washington Gladden's 
** Applied Christianity" (New York, 1892), and 
"Tools and the Man" (New York, 1893), are 
valuable guides inasmuch as their author, along 
with the ardent desire for social improvement, has 
a trained and well-balanced mind. 

Those who have an intellectual or practical 
interest in social reform must never forget the 
importance of dealing wisely with the lowest classes 
in the community. This subject has received treat- 
ment in the chapter on " Social Progress and Race- 
Improvement." Among the many excellent works 
which could be mentioned only two will be named 
in this connection : — 



Warner, Amos G., American Charities. New York, 1894. 
This work by the late Professor Warner may now be 
called a classic. It treats the entire subject in a philo- 
sophical, thoroughly sane, and practical manner. 

Wines, Frederick Howard, Punishment and Reformation. 
New York, 1895. This is the work of an expert in the 
subject with which it deals. 

Mr. John A. Hobson's book, "The Social Prob- 
lem" (London and New York, 1901), is a stimu- 
lating work which fearlessly advocates thorough 
reform, but does not go so far as socialism. Last 
of all mention may be made of Professor John 
Graham Brooks's recent work, "Social Unrest" 
(New York, 1903), which is a discussion of the 
conditions of social reform by one who has spent 
many years in travel and personal investigation. 
Professor Brooks tells us what he himself has seen 
and heard in an exceedingly interesting and illumi- 
nating manner. 



Accidents on American railways, 

Adams, H. C, 135, 208. 

Addams, Jane, 442. 

Administration, importance of, 343. 

Agricultural stage, 43-52. 

Agriculture, proportion of popula- 
tion in, 104. 

Agriculture and manufacturing, 
union of, 54-55' 

Altruism, 162, 164, 452-454. 

American economic thought, prog- 
ress in, 331-333- 

Anarchy, 401, 420. 

Arbitration, 349, 362; in relation 
to classes of industries, 378-383; 
compulsory, 35i-353» 3*3-384. 

Aristotle, quoted, 409 n. 

Australia, natives of, 27. 

Baden, table of incomes in, 261- 
262; discussion of, 262, 267. 

Bagehot's " Physics and Politics," 9. 

Baldwin, James Mark, 154, 162, 
171; "Social and Ethical Inter- 
pretations " reviewed, 450-460. 

Banking and the social conscience, 

Banks, and industrial change, 18- 

Bargaining defined, 156. 
Barter economy, 55, 68. 
Blackstone, quoted, 274. 

Bluntschli, suggestions for regula- 
tion of inheritance, 294-296. 

Boycott, 355. 

Bradford, Governor, quoted, 49. 

Brewer, Justice, quoted, 302. 

Britons in pastoral stage, 45. 

Brotherhood, extension of, 429- 
430; among wage-earners, 432. 

Bryce on classes in America, 76-77. 

Bucher, Karl, 15, 51,66, 139. 

Budgets of France, 325-326. 

Castes, see Economic classes. 

Cereals, production of, in United 
States, 103. 

Chartist songs, 441. 

Child labor, 115, 370-371. 

Civil service reform, 241, 24^- 

Qasses, see Economic classes. 

Qassilication of economic stages, 
table of, 71; from standpoint of 
production, 26; Biicher's, 66- 
67 ; from standpoint of exchange, 
68 ; from labor standpoint, 68- 
69, 72; Giddings', 69-70. 

Qark, J. B., 385. 

Collateral heirs, 285. 

Collective bargaining, 349-350. 

"Communist Manifesto," 77. 

Communism among Indians, 36. 

Competition, and economic evolu- 
tion, 60, 62-63; ^^s nature, per- 



manenqr, and beneficence, 123- 
151; defined, 127-128, 152-156; 
elevating plane of, 135-136, 144; 
between groups, 136; a perma- 
nent force, 144; beneficence, 
147; and industrial war, 158; 
and service, 159; and sheltered 
positions, 160; not always a 
struggle for existence, 160; evils 
oi^ 162; and old age, 163; fun- 
damental in present order, 97, 
192; and ethics, 442, 443; fair, 

Conciliation, see Arbitration. 

G>ncentration of production, 63, 
95; extent of, 107, 205, 255-256. 

Concentration of wealth, 255-269; 
meaning, 256-259; forces in the 
direction of, 472-478. 

Consciousness of kind, 435-436, 

Conservatism of judges, 470. 

Contract, 99; and inequality, 406- 
408; abuse of, 417-419. 

Contracting-out, 419. 

Convict labor, 361. 

Cooperation, social, 89, 90-91, 

Cooperation and profit-sharing in 
relation to diffusion of wealth, 

Corporations, control of, 220; and 
diffusion of wealth, 479; and 
ethical obligation, 446. 

Corruption, municipal, 227-228. 

Darwin, 4, 129, 134, 137, 164. 
Death-rate, decline in, 116-117. 
Degenerate classes, prevention of 

reproduction of, 174-181. 
Degeneration, 10, 137, 163. 
Department of Commerce and 

Labor, 221. 

Devine, E. T., quoted, 144. 

Differentiation, social, 7-9, 74, 75, 

Diffusion of wealth, 255-269, 302; 
forces tending toward, 478-485. 

Dike, Rev. Samuel W., 282. 

Distribution of wealth, see Concen- 
tration, and Diffusion; in the 
United States, Spahr*s table of, 

Division of labor and occupations, 

Domestication, beginnings, 39-40. 

Economic classes, 18, 74-86, 409, 
411, 434, 422-423; in America, 
75; industrial and pecuniary, 
80; and monopoly, 82-84; ideal 
with respect to, 86; middle, 302; 
and ethical obligation, 433; 
wage -earners, 44 1-442 ; and rail- 
ways, 251-252. 

Economic ideals, 430-431. 

Economic inertia, 478. 

Economic interpretation of history, 
25, 447-448. 

Economic relations, regulation of, 

Economic stages, see Classification 
of, and Separate stages. 

Economic thought in America, 331- 


Education and diffusion of wealth, 
479; and monopoly, 216; and 
liberty, 410. 

Egoism and altruism, 452 et seq. 

Employers and employed, 79. 

Employers' liability, 357-358, 362, 
419-420; in England, 371-373. 

Engels, Friedrich, 22, 77. 

Environment and race improve- 
ment, 168-170. 



Equality of opportunity, 8i, 146. 

Ethical obligation, widening and 
deepening range of, 426 et seq, ; 
causes of growth of, 434. 

Ethics as a social science, 457. 

Evolution, one of three great ideas, 
4; in biology, 4-5; social (Spen- 
cer), 6-7; industrial, meaning 
of, 13; development of idea of, 
21-23; recent tendencies in 
industrial, 87-99; of public ex- 
penditures, see Public expendi- 

Excessive wealth, disadvantage of, 


Expenditures, see Public expendi- 

Exports of the United States, 108, 

Factory system, abuses in England 

and America, 58-59. 
Factory inspectors, duties, 367- 


Factory legislation, 356, 360, 361. 

Fair price, 443; see also Compe- 
tition, fair. 

Family, 282, 301-302. 

Farming class, 79. 

Feeble-minded, institutions for, 


Feudalism in modern industry, 


Fishing tribes, 38. 

Forethought, lack of, among primi- 
tive people, 34-36; evolution 
of, 89. 

Fraternity, see Brotherhood. 

Freedom of speech, 238, 486-487; 
see Liberty. 

Free land, effect of, 59-60. 

French Budgets, 325-326. 

Fundamentals of the existing order, 
12, 147. 

German law regarding unfair cotti- 

petition, 444-445. 
Giddings, F. H., 71, 435. 
Greeks, 45, 47, 436, 437. 
Green, T. H., 402. 

Habits of thought, difficulty of 

changing, 61. 
Handicraft stage, 52 ^/ seq, 
Harrison, Benjamin, 214. 
Hebrews, economic life of, 43-44. 
Heredity, social, 171, 404, 455. 
Historical School, German, 21-22. 
Hoe-culture, 30. 
Holmes, Justice, quoted, 415. 
Hours of labor, 346-348, 359, 416. 
Hunting and fishing stage, 26-39. 
Huxley, T. H., 5, 129-130, 134. 

Immigration, regulation of, 179. 
Imports of the United States, 109, 

Individual bargaining, 390. 
Indians, North American, 28-38. 
Industrial betterment, 481. 
Industrial class, rise of, 75 ; see also 

Economic classes. 
Industrial combinations, extent of, 

Industrial evolution, illustrations 

of changes, 13-20; recent ten- 
dencies, 87-99. 
Industrial liberty, see Liberty. 
Industrial society defined, 12. 
Industrial stage, 57-66 ; first phase, 

63; second phase, 63; third 

phase, 64. 
Industrial peace, 374-390. 
Industrial war, 376. 



Indttitriety relative importance of, 

Inequality, 404, 409, 41 1-4 1 2. 

Inheritance of property, 270-314; 
regulation of, 272; taxation of, 
272 et seq, ; decisions of courts, 
275-278; changes in views re- 
garding inheritance, 279; pur- 
poses of law with regard to, 
280-281 ; non-relatives, 287- 
288; state as co-heir, 288, 
295-296 ; justification of tax, 
289-291; gradation, 291-293; 
exemptions, 293; distribution 
of proceeds, 297-299; Wiscon- 
sin bill, 305-309; rates and ex- 
emptions in the United States, 
310-31 1 ; tables of rates and ex- 
emptions in foreign countries, 


Injunctions, 355, 360, 387-389. 

Integration, social, see Interde- 

Interdependence, 18, 64-65, 98, 

378, 423. 

International connections, exten- 
sion of, 431-432. 

Interest, 339-340. 

Irrigation, 61, 145, 422, 470. 

Jenks, J. W., on property in the 

Philippines, 62. 
Jhering, Rudolf von, 457. 
Justice in distribution, 302. 

Keller's " Homeric Society," 
quoted, 46, 47, 436, 438. 

Kidd's " Social Evolution," referred 
to, 10, 132, 147, 454. 

Kropotkin, P., on mutual aid, 
133 n. 

Ljibor bureaus, 362, 484. 

Labor organizations, 348-349; and 
diffusion of wealth, 483. 

Laissez-faire^ reaction against pol- 
icy of, 60. 

Lamarck, J., 130. 

Large-scale production, 96, 205. 

Leroy-Beaulieu, P., 262. 

Liberty, industrial, 398-425; 
eighteenth-century idea of, 399; 
positive, 410. 

Life spheres, social, ii. 

Lindley Bill, 176. 

list, Friedrich, 21-22. 

Lower races, treatment of, 61-62. 

Machinery, productivity of, 65-66. 

Magic and ceremony among primi- 
tive peoples, 33-34. 

Maine, Sir Henry, quoted, 426. 

Malthus and natural selection, 5. 

Manufacturing in United States, 
growth of, 104-105; in handi- 
craft period, 54. 

Marriage, regulation of, 173 et 
seq. ; Connecticut law, 187. 

Marshall, Alfred, 164. 

Marx, Karl, 22, 25, 77, 95, 442, 471. 

Mayo-Smith, R., 263, 265, 473. 

Mazzini, 420. 

Middle class, importance of, 302. 

Mill, John Stuart, 402. 

Millionaires, meaning of growth 
in number of, 260. 

Monopoly, and class formation, 
82-84; and large-scale produc- 
tion, 96; classification, 194; 
natural, methods of controlling, 
93-94; defined, 195; 217 et 
seq.; and municipal ownership, 
225; power of monopolies, 197; 
monopoly price, law of, 200; 



evils, 202; remedies, 214; priv- 
ileged businesses, 339-340; 
tendency toward and limits, 

Moral ideas, development of, 457; 
see Ethical obligation. 

Morgan, Thomas Hunt, 5. 

Morgan, Lewis H., 25 n. 

Municipal ownership, 225 et seq,; 
difficulty of, 234-235; see Public 

Natural selection, 4-5, and social 
evolution, 9; see Race improve- 

Navajo Indians, 40. 

Necker's Budget, 325. 

Nomadic life in first stage, 29. 

Non-union men, attitude of trade- 
unions toward, 365-367. 

North American Indians, 62. 

Opportunity; inequality of, in 
transportation, 210; equality of, 
211; and liberty, 420. 

Organization of industry, 17, 57-58. 

Ownership, private, of land, 48-50; 
see Property. 

Parcels post, 242-245. 

Pastoral stage, 39-43- 

Patent reform, 220. 

Peace, ideals of, 442; industrial, 

" Pflichttheil," 284, 285. 
Physical training, esteem of, 171. 
Physiographic conditions, 41. 
Planlessness in production, 92. 
Plantation life in Virginia, 53. 
Plato, quoted, 420. 
Plutocracy and freedom of speech, 


Police power, 412-417. 

Population, in agricultural stage, 
46; of the United States, 60^ 

Primogeniture and entail in United 
States, 477. 

Private property, see Property. 

Problem of the twentieth man, 

Profit, 338-339. 

Profit-sharing and codperation, 

Property, changes in, 87-88 ; and 
competition, 161 ; inheritance 
of, 271 et seq.; diffusion of own- 
ership of, 271; as a trust, 480- 
481 ; private, in land, 49 ; right 
of, 273-274, 278. 

Prussia, mining law, 208, 387. 

Public control of monopolies, 229 
etseq,; ^^^ Monopolies. 

Public expenditures, evolution of, 
315 etseq. ; historical order, 321- 
322 ; for war, 329 ; ancient and 
modern, 324; growth of, 315- 
319; limitofgrowth, 323; Wag- 
ner's law of, 320; public and 
private, 323, 327. 

Public life, participation of best 
element in, 485-487. 

Public ownership, 225 et seq. ; of 
railroads, 248-253 ; of telegraph, 
telephone, 243, 245, 246-248; 
undue extension of, 386; and 
diffusion of wealth, 483; see 
Municipal ownership, and 'Mo- 

Public works, labor on, 359. 

Race improvement, ^64-181. 
Railways, unity in management, 
93; miles of, in United States^ 



III; acddents, iii ; national 

. ownetthip o^ 248*353. 

Recent tendencies in indoitrial 
evolution, 87 et seq, 

Retifltion* a bond of onion in BCid* 
die Ages, 439; and the eco- 
nomic interpretation of bistorf^ 

Rivalry and success in economic 
life, 152 et seq. 

Savigny, F. K. von, 22. 

Savings institutions and diffusion of 

wealth, 484. 
SchmoUer, Gustav, 46, 43S-439* 
Selection in civilized society, 139 

etseq.; by women, 173. 
Self-conscious social action, 90, 


Self-interest, 40a 

Seligman, £. R. A., 25, 448. 

Simons, A. M., 462-464. 

Single tax, 271. 

Slavery among Indians, 32; in 
agricultural period, 47. 

Smith, Adam, 17, 399. 

"Social and Ethical Interpreta- 
tions," 450 et seq. 

Social conscience, 446-447. 

Social evolution, an inevitable 
movement, 97-98. 

Social forces, 456-457; tending 
toward concentration, 472-478; 
toward diffusion, 478-485. 

Social life spheres, 11. 

Social progress, 455; and race im- 
provement, 164 et seq,; and ret- 
rogression, lO-II. 

Social reform, 461 et seq. 

Social solidarity, 422, 442, 453. 

Socialism, 95, 162; a menace to 

, present social order, 237, 271, 

421 ; intemattond, 443; defini- 

tion, 467; and social reform, 

461 etseq. 
Socialization of consumption, 320. 
Sonnd public life, conditions o( 

Sound currency and diffusion of 

wealth, 482. 
Spahr, Dr. Charles R, 263, 264, 

365, 267, 473. 
Spencer, Herbert, 6, 7, ai, 23, 44, 

99, 130,401. 
Spinning wheel, recency of, 14. 
State governments, relative impor- 
tance of, 328. 
State interference, 55-56^ 58. 
Statistics of progress in United 

States, 100-119. 
Strikes, ii4-"5» 353-354; causes 

of, 374; and benevolence, 389. 
Struggle for existence, 129, 154, 

Sweating system, 343. 

Tariff reform, 219. 

Taxation and diffusion of wealth, 
480; of inheritances, see Inheri- 
tance taxation. 

Telephone, telegraph. National 
ownership of, 243, 245, 246-248. 

Tocqueville, Alexis de, 16; on 
classes in America, 76. 

Town life in Middle Ages, 438-440. 

Trade Agreement, Chicago Inter- 
ocean, 392-397- 

Trade, beginnings of, 37-38, 51, 
426-427, 437; in agricultural 
period, 50; character of foreign, 
in early England and America, 

Trade-union and non-union men, 




Transition from one stage to an- 
other, 57, 60-61. 
Trusts, 96, 204, 475, 476. 
Turner, F, J., quoted, 42. 

Unearned increment of land, 474- 


Unemployment, 341, 344-345- 

Unfit, not increasing, 167-168. 

United States Industrial Commis- 
sion, Report of, reviewed with 
respect to labor, 331 etseq,; final 
recommendations, 359-363. 

United States Steel Corporation, 
64, 94, 206 et seq. 

Unity in industry, 91-92, 94. 

Urban population of the United 
States, 10 1. 

Veblen, T., 80. 

Vigor in modern nations, 138-139, 

Village communities, ties within, 


Wage-earners, fraternal feeling 
among, 440-442. 

Wages movement, 112, 113, 338- 
339. 340-342; fair, 384; the- 
ories of, 385. 

Wagner's law of increasing public 
expenditures, 320. 

Wallace, Alfred, 5, 131, 132, 133, 
164, 168, 172, 180. 

War, and expenditures, 329; in- 
dustrial, 376; and concentra- 
tion of wealth, 476. 

Ward, Lester F., 131, 141-143. 

Wealth, increase of, in United 
States, 103; and well-being, 
102; see also Concentration and 
Diffusion of wealth. 

Weismannism, 131-132. 

Wisconsin State Tax Conunission, 

Women, as toilers, 30-31, 72; and 
selection, 172; employment of,' 
357; hours of, 413-414. 

Words, changes in meaning, 19-20. 

World economy, 440. 





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